Random Walks with Sociology, Law and Economics

Capability Building in Vietnam

2011-09-16T08:20:00.000-07:00

It has been two weeks since I stopped teaching and traveling to focus on research. It feels wonderful. I have been reviewing Mushtaq's theory and the general framework for capability building reading Lall's 2003 paper on the role of the government and building industrial capacity today. I found a few things that I could adapt from his paper to the case of Vietnam- such as the central issue with Vietnam's development is a weak (and corrupted) government with lots of distributive rents and a relatively new, small but productive and growing private sector.

The country is facing two options: (1) strengthen the capability of the private sector by using either neoliberal approach or industrial policies, (2) upgrade its institutional capacity so that they could better manage the increasingly powerful SOEs. The country is caught between these two options since 2006 and so far things are getting worse (politically and economically) instead of better.

The common practice of attaching capability building with technology appears to be a bit short-sighted as the issue with capability building in Vietnam is largely caused by weak institutions and coordination instead of lack of technology. I'm thinking of the ways to expand the scope of capability building in my thesis so that it would encompass other market failures, not just technology and learning.

Above all, I'm suspecting if my hunch feelings is right. It's strange, I feel as if with qualitative analysis, I seem to speculate on a lot of the things based on empirical evidence that heard from fieldwork. I must find a way to validate these assessments. How do you that?

Is It Time For Fiscal Austerity?

2010-11-16T03:12:00.000-08:00

As economic growth in some developed countries falters once again in the third quarter of this year, especially in the United States and the United Kingdom, the debate surrounding fiscal austerity is becoming less fierce now than it was back in July when the growth rates of developed countries beat market expectations. However, the central problem remains: should governments focus on balancing the largest budget deficits ever seen during peace time by cutting government spending and raising taxes? This debate plays an essential role in shaping governments’ short-term and long-term policy, as well as setting expectations among investors and consumers. At first glance, arguments from both sides of the debate seem have merit.

Those who are in favour of immediate fiscal austerity (the “Austerians”) argue that the oversized deficits in some of the largest developed countries, notably the US and the UK – of a dimension never before seen in peacetime countries - threaten long-term fiscal credibility and depress private confidence and spending. Hence, a smaller budget deficit will potentially stimulate growth. In addition, balancing the budget must be an important priority as other issues, such as aging populations, the cost of healthcare and market confidence will urgently need to be addressed as the economy recovers.

The counter-argument from those who oppose immediate fiscal tightening (the “Postponers”) is not that there is no need to balance the budget – most of them agreed that there must be decisive action to reduce the budget gap. However, they argue that the fragility of economies such as the US and UK means that there is a significant likelihood of a double-dip if governments cut back on spending now. Furthermore, given that interest rates close to zero in the US and the UK, conventional monetary policy is ineffective, except to the extent that it supports fiscal loosening. The danger is that premature fiscal tightening would trigger a sharp economic slowdown, as in Japan in the 1990s, thus pitching these economies into deflation. The risk is particularly significant if all developed countries tighten at the same time.

Postponers such as Paul Krugman also assert that much of the deficit is the result of the ongoing economic crisis, which has depressed revenues. As the economy recovers, the deficit will narrow. Imposing fiscal austerity now may in fact make the deficit worse, as a double-dip recession would further depress revenue.

As of last week, third-quarter economic indicators seem to direct policy makers toward agreeing with the Postponers. A report from the Financial Times points out that the US lost 95,000 jobs in September, which briefly pushed the dollar to its lowest level since 1995. In addition, “the private sector created a modest 64,000 jobs, well below the 300,000-400,000 a month needed to keep up with population growth and tackle rapidly the 9.6 per cent unemployment rate,” said the FT. Thus, the US Federal Reserve has recently signaled the possibility of a second round of “quantitative easing”, the creation of money pumped into the domestic economy by the purchase of government bonds, in order to rescue the faltering American economy.

In the UK, the National Institute of Economic and Social Research estimated that growth in the three months to the end of September was just 0.5 per cent, in contrast with the 1.2 per cent recorded in the second quarter and below the 0.6 per cent measured by official data for the three months to the end of August. Last Friday, George Osborne, the UK chancellor, stated for the first time to the Bank of England’s monetary policy committee that he would not stand in the way of a second round of quantitative easing. However, it is uncertain to what extent the renewed slow-down will affect the government’s next round fiscal tightening, due to be announced later this month.

A critical policy question would then be: when is the right time for governments to cut spending, given that inflation may pick up unpredictably?

Paul Krugman contends that budget deficits should become a priority when, and only when the Federal Reserve has regained some traction over the economy, so that it can offset the negative effects of tax increases and spending cuts by reducing interest rates. At the moment, the Federal Reserve cannot do this because interest rates, being near zero, cannot go any lower. Although a similar argument can be made for the UK, its budget deficit, at £13.3 billion in August 2010, is much larger in relation to the size of the economy, forcing the UK government to cut spending much sooner in order to avoid further downgrades in rating to the Sterling.

In the meantime, global microeconomic reforms are inevitable if the world economy is to grow in a more sustainable way. Emerging economies need to allow their currencies to rise. China, in particular, must boost investment in services, remove trade distortions and promote domestic consumption. On the other hand, rich countries should tread carefully with fiscal consolidation – sensible budget repair should be less about short-term deficit-slashing and more about lasting fiscal reforms, from raising the retirement age to trimming health care costs that depress workers’ share of income and encourage households to save less. Otherwise, attempts to cut spending now will bring about the very consequence that they meant to avoid – a further widening of the budget gap and quite possibly a second economic recession.

A Proposed Solution for California Budget Crisis

2009-09-10T12:34:00.000-07:00

People pointed to California's divided government and the supermajority law, which requires the legislature to adopt a budget with a two-third vote as reasons that cause the ongoing budget crisis in the Golden State over the last decade. The budget, which was passed by Arnold Schwarzenegger on July 24 of this year was said to virtually guarantee another fiscal crisis next year despite the fact that it comprises $15 billion in service cuts, including $8.1 billion in education cuts. This is not to mention that California budget shortfall is projected to top $40 billion over 2009-2010 fiscal years.

In searching for the answer to California budget crisis, two law professors, professor Chris Elmendorf of UC Davis and professor Ethan Leib of UC Hastings, recently proposed an attractive solution published in the New York Times' Op-Ed Columns. Here is how it would work.

If the Legislature and the governor fail to adopt a budget four weeks before the deadline for the new fiscal year, a group of randomly selected citizens — one from each legislative district — would be convened to resolve the stalemate. Three competing budgets would be drawn up: one by the governor, one by the Democratic caucuses in the legislative branch and one by the Republican caucuses. (These proposed budgets would have to be finalized before the citizens were selected.)

For two weeks, the citizens’ assembly would hear from and question government leaders, policy experts, interest groups and other supporters and critics of the proposed budgets. The citizens would then deliberate among themselves and vote by secret ballot on which of the budgets to adopt. The vote would take place on the budgets as originally submitted; neither the citizens nor lawmakers would be able to make amendments. The winning budget would become law.

This arrangement would have a number of virtues. First, it would ensure that states adopt budgets in a timely fashion, protecting bond ratings and freeing lawmakers to attend to other important business.

Second, it would give the three institutional actors in the budgetary process — the governor and the Democratic and Republican caucuses — strong incentives to devise budgets that appeal to middle-of-the-road voters, not political ideologues or special-interest favor seekers. Citizens who participate in the two-week assembly would also learn an awful lot about their state’s fiscal situation and competing legislative priorities. These citizen participants would not be as susceptible to sound-bite misinformation as in more traditional exercises of direct democracy.

Our scheme would also do wonders for accountability. When budgets are adopted under divided government (or supermajority requirements), it is hard for voters to figure out exactly who is responsible for the shape of the compromises. If the upside of divided government is centrist compromise, the downside is weakened retrospective accountability at the polls. Our approach to budgeting promotes accountability because the enacted budget would unequivocally belong to “the governor,” “the Republicans” or “the Democrats.” Dissatisfied voters would know exactly whom to reward or fault when they go to the polls at the next election.

Finally, our proposal honors Americans’ insistence on a strong popular voice in government, without demanding too much of citizen participants. It would require them to perform only a fairly simple task: rank your preferences among three proposed budgets, after hearing out the proponents and opponents of each.

I found the professors' proposal convincing. Nevertheless, given how fed up our voters are as showed during May 2009 special election, I am concerned if Sacramento's effort to solve the budget crisis would get the same treatment it deserves to have. Being the tenth largest economy in the world, California has been loosing its competitive advantage in the eyes of investors by being the state that can't solve its problems. The longer Californians refuse to subjectively face this dilemma, the more harmful and long-lasting the effects.

*A copy of this entry was posted on Transnational Law Blog.

The Case Of Ben Bernanke

2009-08-31T14:02:00.000-07:00

Last week, most news applauded Obama’s reappointment of Ben Bernanke as the chairman of the Federal Reserve. Of the few commentators who opposed the reappointment, Morgan Stanley Asia's Stephen Roach lists three critical mistakes that Bernanke made leading toward the financial crisis. He argues that Bernanke should not be reappointed because his “pre-crisis actions played an equally critical role in setting the stage for the most wrenching recession since the 1930s.”

First, and foremost, he was deeply wedded to the philosophical conviction that central banks should be agnostic when it comes to asset bubbles. On this count, he stood with his predecessor - serial bubble-blowing Alan Greenspan - who argued that monetary authorities are best positioned to clean up the mess after the bursting of asset bubbles rather than to pre-empt the damage. As a corollary to this approach, both Mr. Bernanke and Mr. Greenspan drew the wrong conclusions from postbubble strategies earlier in this decade put in place after the bursting of the equity bubble in 2000. In retrospect, the Fed's injection of excess liquidity in 2001-2003, which Mr. Bernanke endorsed with fervour, played a key role in setting the stage for the lethal mix of property and credit bubbles.

Second, Mr. Bernanke was the intellectual champion of the "global saving glut" defence that exonerated the US from its bubble-prone tendencies and pinned the blame on surplus savers in Asia. While there is no denying the demand for dollar assets by foreign creditors, it is absurd to blame overseas lenders for reckless behaviour by Americans that a US central bank should have contained. Asia's surplus savers had nothing to do with America's irresponsible penchant for leveraging a housing bubble and using the proceeds to fund consumption. Mr. Bernanke's saving glut argument was at the core of a deep-seated US denial that failed to look in the mirror and pinned blame on others.

Third, Mr. Bernanke is cut from the same market libertarian cloth that got the Fed into this mess. Steeped in the Greenspan credo that markets know better than regulators, Mr. Bernanke was aligned with the prevailing Fed mindset that abrogated its regulatory authority in the era of excess. The derivatives explosion, extreme leverage of regulated and shadow banks and excesses of mortgage lending were all flagrant abuses that both Mr. Bernanke and Mr Greenspan could have said no to. But they did not. As a result, a complex and unstable system veered dangerously out of control.

I thought to myself what would be the risk of not having Bernanke being in charge of the Federal Reserves and whether the outcome would be worse or better given how susceptible investors are to internal changes. The argument that the monetary authorities should not pre-empt the damage of an asset bubble is a valid one. History, including the Great Depression, and Japan’s lost decade, repeatedly demonstrates how monetary tightening in the bull market is damaging to the economy in which speculations are inherently pervasive. Secondly, even if “global saving glut” should not be an excuse for American deteriorating saving accounts during the pre-crisis period, it is, by all means, a true phenomenon, which played a partial role in forming the financial crisis. Asia was not to blame for the crisis; although, the unprecedented accumulation of reserves in foreign currencies inadvertently augmented the US asset price bubble and widened derivative markets. Lastly, it is inescapable that more regulations are knocking on the door notwithstanding if it’s desirable to the Fed’s chairman. I suspect the reforms of banking and financial sectors will take the center stage as health care reform and economic recovery progress. Unless Stephen Roach could point out a better alternative to replace Ben Bernanke, at the moment, the risk appears to supersede the benefit of replacing him.

*A copy of this entry is posted on Transnational Law Blog

In the Darkening Shadow of California Budget Crisis

2009-06-12T09:18:00.001-07:00

A few days ago, I received some updated news from our Chancellor at UC Hastings regarding Governor Arnold Schwarzenegger’s proposal to cut 100% state funding for the law school. With $24 billion deficit, the governor was searching for further cuts to make up the remaining $5.5 billion and UC Hastings' 10.3 million public fund, equivalent to approximately 25% of the school budget, was proposed to be taken away all together except for $7,000, which is the nominal amount required from the state by the bequest of the founder, S.C. Hastings. The proposal provoked deep distress within Hastings community since it would amount to $8,175 increase in tuition for Hastings' 1260 student population. The problem is further complicated by the fact that Hastings' 2009-2010 tuition has already set for the new school year. Other alternatives are much less feasible such as admitting more students to Hastings over-crowded facilities or letting go highly qualified faculties which would in turn damage the law school's teaching quality and overall rankings. Otherwise, should UC Hastings, supposedly an arm of the UC system, convert into private law school? I will leave this debate to BLT's readers.

Here is the good news from our Chancellor:

Dear Students,

We are pleased to announce that on Friday, June 5th the budget conference committee voted unanimously to substantially restore UC Hastings' state funding, which will put reductions made to the law school’s budget in substantial parity with cuts applied to the UC system. If this decision stands, we will still receive a budget cut, but nothing as extensive as 100 percent of our state support, as recommended by the Governor. CFO David Seward reported that several members of the committee spoke about the calls and emails they had received, about UC Hastings' unique history as California's oldest law school, and the inequity of singling the law school out for disparate treatment.

California’s budget crisis is not over, however, and difficult choices remain to be made. The conference committee stated they might have to revisit the higher education budget later in their deliberations, including support for UC Hastings. In addition, even if the legislature continues to support the restoration of UC Hastings' state funding, the Governor can countermand, or “blue pencil” the legislative recommendation. So it is important that we not relax our vigilance. We will continue our work on educating the legislature and the Governor's office.

People talk about the long-term benefit of education as a type of secured and high turnout investment for the future. Yet, at the time of crisis and financial difficulty, the value of education almost always faces challenges and skepticism and funding for public education is often on the top the reconsidered list. What appeared as signs of unequal treatment among public universities for higher education is the reality that the funding cuts for all UC Universities are at roughly 20% while Hastings faced nearly 100% withdrawal from the state. With the recent establishment of UC-Irvine law school, one may also rightly ask, as Senator Denise Ducheny, D-San Diego did: "Why would we start a new law school when we've had Hastings around for more than 100 years, and it has a great reputation?"

I was deeply concerned with public reaction and was distressed over the result of California’s deficit-reducing ballot initiative last month. The result convinced me that misinformed exercise of democratic power through special voting can be much more damaging than non-action itself. Yet, the long-term effect of a possible alternative such as having no voting incentive seems entirely unjustified and unacceptable. This is the case where I suspect that the communication between our governor office the people had failed allowing information disparity gave rise to hostile sentiments toward a possible solution for California budget crisis. My direct experience with the state's budget crisis through Hastings community also reminds me that the harmful effects of these deepening cuts could be much worse for other institutions that are more dependable on public fund. Thankfully, about 75% of Hastings budget are raised through other sources.

The glorious celebration of California's dot-come and asset booms has been long gone. How Californians cope with this financial calamity and budget tightening remains to be seen in days ahead. What I do know for certain is that public service will be drastically reduced, income inequality will rise, hence, lowering quality of life. Lastly, it is the poor and various under-represented groups that will suffer the hardest hits among us all.

Schwarzenegger's Defeat and the Californian Discontent

2009-06-10T09:31:00.000-07:00

From the Financial Times regarding the result of California budget-reducing ballot initiative:

Their defeat, in a state that desperately needs a path back to fiscal balance, shows how difficult it is to convince voters that they have been living beyond their means. It predicts the troubles in store for other countries guilty of the same sin.

Part of the fault lies with Arnold Schwarzenegger, brought to power by popular disgust with dysfunctional government. Despite early successes, the swashbuckling former film star has not fulfilled his mandate for reform. Even more to blame are the intransigent special interests he has failed to win over.

But ultimately it is Californian voters who have fallen short. The state’s direct democracy gives them influence – and responsibility; but they voted only to ban pay rises for lawmakers. If they think they can escape belt-tightening of their own, they are dreaming. When they wake up, it will be to a nightmare.

We are living in a French land called California. People refuse to come to agreement, and day-dream of a perfect world, yet unwilling to take in any financial sacrifice. If we don’t correct our tax system, California could never get out of the ghost shadow of budget crisis. The domino effects already started with CA bond being the lowest rated bond in the nation and owning one of the worst school systems indeed brings us no pride. We need better communicators to point out that this is no one-man fault and the solution needs a collective action from the people.

Falling Vietnamese Dong

2009-06-04T23:42:00.000-07:00

The Financial Times recently reported that the Vietnam's dong is depreciating steadily as budget deficit and account imbalance grows with "chronic current account deficit that reached $8.4bn, or 9.3 per cent of gross domestic product, in 2008". Vietnamese government is facing the threat of not gathering enough money for its $80bn fiscal stimulus package as bonds and other commercial tools are falling flat. Investors are holding onto foreign currency due to the uncertainty of the dongs mostly credits to growing trade imbalances and insufficient foreign reserves.

This is a predictable test that most developing countries face at this stage of development, and is what economists considered as the "original sin," for which domestic currency is not used for foreign loans and on long term domestic loan contracts. Reliance on foreign currency for domestic exchange and long term loans make the country highly vulnerable to exchange shock and speculative attack which were the major drivers of the 97-98 Asian financial crisis. The Vietnamese government has little choice, and each option carries relative cost. Raising more reserves will temporary slow down growth, but this must to be done to boost investor's confidence on domestic market and to provide a stable macro economic framework for further development. Vietnamese government must find the outlet to do this- better now than later.

Statement of the Day

2009-05-15T06:12:00.000-07:00

Creating an effective state requires political organizations where leaders take on the costs and risks of solving prisoner's dilemma problems. But this task will be simpler if the distribution of costs and benefits is acceptable to that society and distributive conflicts do not result in permanent war.- Mushtaq Khan

I'm in awe of his intellect.

May the Rise of China Offer Hope for a Multi-Power World?

2009-05-10T03:19:00.000-07:00

Recently David Pilling of the Financial Times published a thought-provoking article under the title: “Asia Pays Tribute to Its New Superpower,” which discusses how the rise of China during the time of economic crisis has been perceived within the region and beyond. I found the true nature of this article troubling. David Pilling said it right: there is a sense of “trepidation at the rise of China’s power.” Such idea fuels much of my thoughts the past couple of days. Pilling opened his article by a contemplation of a potential multi-polar world.

There has been much chatter about the “G2” lately. But the idea that the US and China can together, and semi-exclusively, take on the world’s biggest problems is overdone. That day may come. For the moment, though, there are limits to how much an authoritarian government presiding over a relatively poor country can contribute to global problem-solving. For now, the rise of China and the relative decline of the US are more likely to mean a multi-polar than a bipolar world.

The article lists some indicative examples to demonstrate how the world has changed its grasp diplomatically toward China. By owning roughly $1,400bn of the U.S. asset, Chinese government had quieted Hillary Clinton on issue related to human rights, Taiwan and Tibet during her visit early this year. During the G20 gathering in London, France’s president, Nicolas Sarkozy, expressed his withdrawal from supporting Tibetan independence. Smaller countries have provided greater service. Vietnam’s prime minister, Nguyen Tan Dung recently spent one week touring China in anxious mode to close the $11 billion trade gap between the two countries. The South Korean warning of the “Beijing Consensus” reported to leave its Korean diplomats in Beijing apprehensive. What’s more? Taiwan is likely to allow China’s Mobile to purchase 12 percent of the Far East Tone, a Taiwanese mobile operator. Such commitment arguably was arranged to earn Beijing’s agreement toward the Taiwanese’s presence at the WHO’s annual meeting. In just a few days, the news was sufficient to boost Taiwanese stock market up nearly 15% after Beijing announced its consent.

I sometimes wonder how the political and economic landscape of the world be transformed if China grows to be the second largest economy in the world taking over Japan and the European Union. That day may not be postponed that much further as we initially thought. Nonetheless, despite an impressive rapid growth in the past two decades, at $7,600 per capita, China’s per capita GDP still ranks 107th in the world. The country itself is also facing various internal problems namely food and resource shortage, raising unemployment, social and regional marginalization, as well as a degrading environment that together raise serious question of Chinese economic sustainability. There are much awaiting this nation in the post-crisis period to resolve its internal issue. For now, the idea of a multi-polar world offers me much greater comfort.

*Nations with highest GDP (in 2006, trillions of U.S. dollars), figure taken from the Hoover Institue.

The Macroeconomic Case Against the Giving of Aid

2009-05-09T05:16:00.000-07:00

Abstract

While foreign aid is generally motivated by respected incentive which is to redistribute income globally, especially among the least developing countries (LDCs), as well as to simulate global growth and stabilization, the arguments for and against aid have been very unsettling among social scientists. It is out of the scope and limitation of this paper to thoroughly present two sides of the debate mostly started ever since Chenery and Strout invented the infamous and controversial two-gap model in 1966. Thus, the paper will mostly look at the skeptic perspective of aid within the macroeconomic framework setting aside issues related to institution and morality.

Structurally, the paper starts by introducing Chenery and Strout’s two-gap model. Next, it presents the on-going disputes against this model arguing that the giving of aid could be counter-productive due to the effects of aid tying, domestic saving displacement and Dutch disease. The paper further advances into the contention by addressing the potential hazardous effects of the Monterrey Consensus and the Doubling of Aid due to diminishing returns, speculative attacks, which may eventually lead LDCs to a currency crisis. It is in this the author opinion that international aid must involve in a more effective and accountable form of assistance instead of devising more dependency from poor countries. International agencies and donor community must make provision for improving the quality of aid before increasing the quantity of aid.

Here is the draft for the paper. While at this topic, the president of Rwanda, Paul Kagame, published an opinion on the Financial Times regarding the aid culture in his country two days ago under the title "Africa has to find its own road to prosperity." President Kagame makes a similar argument: "...the rich world and multilateral institutions have a heart for the poor. But they also need to have a mind for the poor." How delightful to read a view from an aid receiver himself.

The Delayed Apology

2009-05-05T02:03:00.000-07:00

Gideon Rachman of the Financial Times today offers a very well written article and some valuable insights toward the Republican's attack of Obama's open foreign relations with the rest of the world. Being outside of the country and having the opportunity to take in the world's opinion toward the Bush's years, I can't agree more with Rachman. Apology, if done right, is not a sign of weakness. It is what a "mature" democratic nation do in the process of learning from its own shortcomings.

A willingness to discuss your country’s history self-critically is a mark of an open society. Vladimir Putin has had Russian history textbooks rewritten to take a more positive view of Stalinism. The Chinese ferociously repress any challenges to the official version of the history of Taiwan. Mature democracies do things differently. They are not afraid of open discussion. Mr Obama’s willingness to acknowledge past American errors is a sign of strength, not of weakness.

At last, I finally have reasons to hope that the U.S. broken relationship with the rest of the world will be amended conceivably for the betterment of all.

The Industrial Policy Aspect of Learning Rents

2009-05-04T00:46:00.001-07:00

Abstract

Industrial policy often plays a crucial role particularly in developing countries, within which learning rents are often argued among heterodox economists to be one of the most important policy instruments for developing countries to move up the value chain as well as to sustain steady growth. In an attempt to evaluate the role of learning rents as an industrial policy option, this paper will first explain the theoretical concept of learning rents, followed by presenting the institutional and political conditions which cause learning rent to either success or to fail. The paper offers specific case studies of South Korea, Malaysia, Thailand, India and Brazil to illustrate the argument.

The link to the paper's draft is here.

An American Life Story

2009-05-03T12:39:00.000-07:00

Although I'm occasionally partial to economics and more often see myself as an economist than a lawyer, I forever cherish how the law has changed me and my understanding of the world through the lenses of the US and international legal landscape. I have been very appreciative to be a part of the legal community. Today, such gratitude intensifies by the Washington Post's heartfelt portrait of Justice David H. Souter. The story invokes much of my admiration and inspiration for the Superior Court Judge- a simple life fills with unwavering public service and modesty.

Justice Souter recently announced his retirement from the Highest Court leaving this June when the Court will recess for the year. At the age of 69, he would have then served in the bench of the Superior Court for 19 years. Souter's legal legacy in the heart of the liberals will never be forgotten, but the life that he led depicted in "Quiet N.H. Home Is Where Souter's Heart Has Always Been" humbles many of its readers.

"He never unpacked," said Thomas Rath, one of Souter's closest friends. "A few years ago, he said, 'I figured I'd take the pictures out of the boxes and hang them up, but I figured in a few years I'd be coming back to New Hampshire and I'd have to pack them back up, so I might as well leave them in the boxes.' "

At the relatively young age of 69, Souter is giving up what he once called "the world's best job in the world's worst city" for a life of simple solitude in Weare. It is a rural hamlet that fascinates him so much, he has told neighbors he may someday write a history of the town.

When he departs this summer in his Volkswagen sedan -- he dislikes flying and always drives himself to and from Washington, leaving at odd hours to game the traffic -- Souter will cross the Piscataquog River, drive past country stands selling maple syrup and fresh eggs, and turn down a narrow, unmarked dirt road.

**David H. Souter's house in Weare, N.H., a rural town where the Supreme Court justice has said he finds "restoration." He will return there this summer as he retires from the bench. (By Philip Rucker of The Washington Post)

Souter's story touches my heart deeply. If only I could lead a humble yet worthwhile life like him one day.

Reaching out to Sri Lanka

2009-05-01T03:40:00.000-07:00

I have been regularly following up with the news from Sri Lanka. Images and news from this civil war brought me solemn concern and uneasiness. Here in London, I caught this scene one weekend early this month. A sense of helplessness arrived soon after I stepped deep into the scene seeing men, children, elders and women yelling out loud their urging need and asking for international intervention. They were right, Sri Lanka is facing a humantarian criris; although, the Tigers themselves also committed the type of war crime that they are pledging against Sri Lankan government. There can never be a right reason for war and violence. Yet, at times people involved seem to put on a convincing case with the Tamil Tiger for their own justice (or injustice).

Last Thursday, Sri Lanka's President, Mahinda Rajapaksa, rejected advice from European high-level delegations to proceed a temporary ceasefire and told the representatives to stop lecturing him.

“The government is not ready to enter into any kind of cease-fire with the terrorists. It is my duty to protect the people of this country. I don’t need lectures from Western representatives,” said the President in a speech distributed by his office, the New York Times reports.

According to the United Nation, 6,500 civilian have died and twice have been wounded since late January. At the moment, there are still 50,000 civilians are trapped in the combat zone with very little humanitarian supports. The refuge camps are reported to be "overcrowding, malnourishment, dehydration and limited medical facilities." Despite growing tension with foreign governments, the Sri Lanka government has been unwilling to openly allow international support-groups to enter further into the war zone.

Last March, Sri Lanka reported its slowest economic growth rate in five years last year, at 6% underlining the need for the government to push ahead with talks on a bail-out from the International Monetary Fund. However, due to the government's resistance, the United States had decided to delay a $1.9 billion International Monetary Fund bailout for Sri Lanka’s central bank to pressure the government to do more to help trapped civilians.

Such intervention seems to do little to change the Sri Lankan government's attitude toward cooperation and helping displaced civilians from boths ethinic groups. International governments and agencies must continue to pressure Mahinda Rajapaksa's government to allow international humanitarian groups to rescue and provide basic aids to the war victims.

Over the Worst Yet, Japan?

2009-04-30T09:37:00.000-07:00

We don't know for sure, but at least Japan is showing signs of stabilization. Despite growing deflation and addition contraction at 3.3% this year, the Financial Times today reported some stabilizing signs from the second largest economy in the world giving hope that the worst of the recession may be almost over.

So far, industrial production in March rose at twice the expected pace, climbing 1.6 percent month-on-month. In addition, factory output rose for the first time in six months. The Royal Bank of Scotland in Tokyo also reported: "factory production appears to be getting close to the bottom." That was March, industrial production is expected to continue rising further this month, as well as May due to manufacturers trying to make up for their previous inventory reductions.

Japan predicted stabilization sheds lights and a glimpse of hope for the Asia Pacific region; even though, recovery is probably still far from the horizon. Toyota is expecting its "worst slump in memory" (for almost six decades) and Normura recently revealed a record of $7.2bn net loss. Earlier this week, the Japanese government announced additional issuance of $175 in bonds as tax revenue shortfalls is becoming inescapable this coming fiscal year. However, it remains unclear if the central bank will strike for any further recovering measures. It is keeping overnight lending rate at 0.1 per cent at the moment.

We can't expect good news on global recovery just yet, but stabilization is a real good sign regardless.

Kitchen Thought on Economics

2009-04-22T06:00:00.000-07:00

There is not, and never will be, an economic theory of everything. Physics may, or may not, be different. But the knowledge we can hope to have in economics is piecemeal and provisional, and different theories will illuminate different but particular situations. We should observe empirical regularities and – as in other applied subjects such as medicine and engineering – we will often find pragmatic solutions that work even though our understanding of why they work is incomplete.-- John Kay

Matthias and I had a conversation about economics this past Sunday. During our conversation, I joked with him that economics, as a discipline, is somewhat useless. I was only partially serious, but in a way, it reflects my disappointment (as well as appreciation) of the limitation my own discipline.

What I meant was nicely articulated by Kay above. In his article "How economics lost sight of real world," Kay was somewhat pessimistic of how the disciplined has been gradually lost touch of reality by building up unrealistic assumptions from one to the other.

I personally don't think economics is useless. On the other hand, economic understanding has never been as essential in our modern life as it ever was in the past. But such limitation must be, at some point, realized and minimized. There is much pessimism and divergence from the discipline at the moment. Perhaps, they were justified. Will an eventual unity necessary?

It's not the Sport. It's the life chosen by one.

2009-03-27T16:21:00.000-07:00

I'm heart broken. Shane McConkey has just passed away yesterday in Italy. Being a mountain biker and a novice skier, I'm speechless after reading the news and watched his works. If one could measure up to the concept of fearlessness, it's McConkey who deserves such recognition. My heart goes out to his family.

McConkey was the founder of Ski & Base Jump. He died of a Base Jump incidence due to malfunctioned skies. Sad. But that's the life that I rather live- full and complete.

Federal and California State Tax: One Step Forward, Two Steps Back

2009-03-25T14:15:00.000-07:00

If you would like to find out the tax aspects of Obama's stimulus package which seizes about 36% of the stimulus, as well as how the State of California mends its budget crisis through various tax increases, there was a recent discussion on federal and state tax issues given by professor Heather Field and professor Darien Shanske, two respected tax professors at UC Hastings. The discussion was recorded in mp3 format and is now posted here.[mp3]

Other than the applicable nature of the subject discussed, the discussion offered some insights of how CA tax increases will negate many parts of our federal tax credits and how our state’s constitutional setting makes it difficult to avoid similar budget crisis in the future.

In the first section, professor Field opened by explaining the need for a stimulus package and why the tax system plays an important role in stimulating economic activities. Professor Field then discussed the various implementations of the tax aspect which include non-repayment credit for first time homebuyers, educational tax credit for students, and sales tax reduction for new vehicle. The lecture ended with a thought provoking discussion as to weather the stimulus will work as well as the short term and long term nature of these tax provisions. It is appeared that President Obama is seeking to keep some of these tax provisions permanent despite growing concern over our budget deficit. Here, professor Field nicely instigated the debate over the role of our tax system as a tool for income redistribution.

I thoroughly enjoy the professor's subjective approach toward controversial issues such as the role of our tax system and whether Obama’s tax cuts will sufficiently motivate economic activities in the short run. Field posited the question as to why the tax credits only applies for a “limited window,” and what would be the consequence of extending these provisions permanently.

Other than issues related to fairness and wealth distribution, economists have been concerned over inflation and potential negative impact on monetary system through tax instrument. We are injecting a huge amount of capital inflow to the economy, in the long run, it will take some painful interest hike to restrain these capital surplus, tame down inflation and pay off the budget deficit. Furthermore, at some point, consumers may stop responding to tax cuts as an effort to stimulate economic activities. Behavioral economics tells us that consumer behaviors are often altered by short term and long term expectations of the consumer’s future income.

The discussion quickly moved on to Darien Shanke discussion on California budget crisis and how California state has used tax system to mitigate budget problem in the time of overall global crisis. If California were an independent state, it would have been the tenth largest economy in the world. Here, professor Shanske introduced the not-so-obvious paradox: if California hasn’t overspent, why does a State which arguably has the highest income and sale tax in the country constantly finds ways to bail itself out of budget crisis over the past couple decades?

The key problems rest in property tax and the fact that California doesn’t have a standard sale tax system. At ¼ of the country’s average property tax, the State imposes the lowest property tax rate in the nation. Because income tax is less sufficient and stable than property tax, our State budget has always been much more vulnerable in the time of crisis as it is now. For these reasons, our state is now seeing itself going through massive lay offs (10.5% unemployment rates in February), budget cuts on education, double fee on car registration and general income tax increases.

Professor Shanske then questioned how did end up here? Why can’t we simply increase property tax to balance the budget? California is the only State in the country that requires 2/3 majority to pass the budget. Shanske reasoned that having super majority requirement is not too "insane", but if the State were to make it very difficult to change the budget and tax structure, it should have had a good initial arrangement. Here, our State legislators happened to choose the worse possible arrangement by adopting a highly unstable tax system, and making it very strenuous to change it. Given the State's distressing institutional constrains, professor Shanske left his audience empty of any probable solution. He is not to blame.

The lectures are immensely informative and thought provoking. Nevertheless, they do not require any tax background from its listeners to appreciate the on going changes and debates in the federal and state tax system. "The Tax Aspect of the Stimulus Package"[mp3] is a highly recommended tune.

Female Economic Blogger

2009-03-20T10:37:00.000-07:00

Rodrik posted an interesting blog entry under "Scholarship vs. Bloggership" back in September 2007 presenting some statistical data that shows the relationship between scholarship and bloggership. Here is the scattered data on graph:

...that high-impact scholarship appears to be a sufficient but not necessary condition for successful bloggership. Once one leaves out the very top scholars, there is very little relationship between scholarly impact and popularity as a blogger. Cyberspace creates its own pecking order.

I additionally found fascinating that by September 2007, there were approximately only two female economic bloggers on the cyberspace. I am sure the number has been increasing quickly over the past year and a half. Yet it still show the gender gap in academic adaptation to this type of non-traditional academic communication in the blogosphere. May be I should take it easy on myself about blogging and appreciate my own existence .

Rethinking the Washington Consensus on Trade Liberalization

2009-03-17T02:29:00.000-07:00

"‘Stabilize, privatize, and liberalize’ became the mantra of a generation of technocrats who cut their teeth in the developing world and of the political leaders they counseled"- Dani Rodrik, Professor of International Political Economy, Harvard University

Across legal economic disciplines, there have been many arguments regarding the benefits of free trade on developing countries. At the heart of such discussion is the controversial result of the Washington Consensus “describe[ed] a set of ten specific economic policy prescriptions that … constitute a "standard" reform package promoted for crisis-wracked developing countries by Washington D.C based institutions such as the International Monetary Fund (IMF), World Bank and the U.S. Treasury Department.” (Wikipedia). According to Dani Rodrik (2006) the ten commandments of Washington consensus were:

1. Fiscal discipline
2. Reorientation of public expenditures
3. Tax reform
4. Financial liberalization
5. Unified and competitive exchange rates
6. Trade liberalization
7. Openness to FDI
8. Privatization
9. Deregulation
10.Secure Property Rights

In an assessment of the literature on the theory and empirical research relating to the benefits of trade liberalization, Deraniyagala and Fine (2001) found that much of the works were flawed, and concluded that the extent to which free trade benefits economic development is unknown. As the result, the past three decades since 1980s found many political economists arguing for a better approach toward trade liberalization in order to minimize its negative impacts of economic backwardness as in the case of Latin American or income distribution and regional polarization as the case of China.

Mexico is an example of a failed economy that followed the conventional wisdom of trade liberalization rigidly. Here, we find that more than one lesson could be learned. The country started its economic reform in 1985. Under tremendous pressure from the U.S. and the IMF, Mexico radically opened up its economy to the world market without sufficient institutional reform to accommodate the economic adjustment. “Import penetration increase from an average of 11.3 percent in 1080-85 to 14.5 in 1986-90. By 1990, import penetration had already reached 17 percent.” (Dornbusch, 1992). The sharp rise in imports, which was not accompanied by immediate gain in exports and foreign direct investments damaged Mexico’s domestic market and defy many infant industries. (Dornbusch, 1992). It is argued that Mexico, as well as Latin America as a whole, did worse than its pre-1980s period, when import substitution, protectionism and macroeconomics populism were enforced. (Rodrik 2007). As Rodrik asserts: “That the region did better with these discredited policies than it has been under open-market policies is a fact that is quite hard to digest within the conventional paradigm.” Such paradox reinforces the importance of a new approach to trade liberalization where country’s institutional and historical background are all too significant to be ignored and total trade liberalization alone may not generate the growth that its creator promised. Here, the role of the government and some forms of targeted protectionism at the beginning of the reform may be useful. South Korea and China offered excellent case studies for its usage of the new trade theory to their economic benefits.

Korea did not play by the orthodox wisdom (nor it has ever accepted the Washington Consensus to be therapeutic during the Asian crisis) when it started to integrate into the world economy. In contrast, the country successful economic reform involves two major key strategies- market orientation coupled with central planning in developing and protecting infant industries while strategically opened up other industries to the world market. During the reform, Korean government, indeed, acted as an entrepreneur to induce desirable private investments toward targeted industries. Korean trade liberalization, therefore, was a selective process instead of being driven solely by global marketization. Many major sectors were deliberately protected and excluded from trade. By using selective export strategy and heavy government intervention, Korea was able to develop many highly competitive manufacturing industries such as automobile, electrical appliances and shipping which respectively hold their own names in the world market.

China started its reform by first rejecting the conventional wisdom of global liberalization and calling its reform “Socialism with Chinese Characteristic.” Unlike Latin America, Chinese government moved cautiously from central planning to gradual adoption of institutional and mechanism of market economy. Rodrik (2004) argues that China reformed its incentives in a “two-track manner” by grafting a market system on top of a central-planned system, rather than abandoning the latter altogether. The country also underplayed private property rights and relied instead on township-and-village enterprises owned by local governments as well as opened up to the world partially by establishing special economic zones. (Rodrik, 2004). Without following the Washington consensus blindly, the result of Chinese economic progress has been impressive. China’s GDP performance has been consistently stayed at 8-10% growth rate in the past 20 years. Here, China’s success challenged the conventional wisdom total trade liberalization and market orientation.

Despite how countries have been benefiting from trade, there exist multiple issues created by export growth strategy itself such as income inequality and regional polarization. According to Ocampo and Taylor (1998), globalization has intensified the income gap and income distribution especially in countries with comparative advantage in skill-intensive products. The authors offer examples of African economies whose comparative advantage in peasant production has worsened income distribution. Similarly, despite China’s conservative approach toward trade liberalization in accordance with government intervention, the country has been facing serious issues regarding income inequality and regional polarization. Prior to the eruption of the global financial crisis, labor migration had moved rapidly to export processing zone set up mostly along the West coast region of the countries. As the result, wage labor and prosperity appeared to increase drastically faster than the interior regions in which agriculture remained to be the dominant means of production and income creation. Here trade liberalization on its own cannot effectively solve social problems created by export-oriented strategy.

Don’t get me wrong. I am not against free trade or market liberalization. I am wholeheartedly against the IMF’s “one size fit all” formula and see the importance of a thorough understanding of country’s historical and political background before any economic policy is prescribed. Market failures are deeply embedded in economic system, which can’t plainly and ignorantly be corrected by Washington’s 10 commandments.

One may then ask: “So, what is the IMF doing these days given our ongoing financial crisis? Has there been a “new” Washington Consensus?” My next entry on this topic will follow.

*Bibliography with attached pdf files on hyperlinks

Deraniyagala, Sonali, and Fine, Ben, “New Trade Theory Versus Old Trade Policy: a Continuing Enigma,” Cambridge Journal of Economics, Vol. 25, pp. 809-825, November 2001.

Dornbusch, Rudiger, “The Case for Trade Liberalization in Developing Countries,” Journal of Economic Perspectives, Vol. 6, issue 1, pp. 69-85, 1992.

Ocampo, Jose and Taylor, Lance, “Trade Liberalization in Developing Economies: Modest Benefits but Problems with Productivity Growth, Macro Prices, and Income Distribution,” Economic Journal, Vol. 108, pp.1523-46, September 1998.

Rodrik, Dani, “How to Save Globalization From Its Cheerleaders,” KSG Working Paper No. RWP07-38, September 2007.

Rodrik, Dani, “Rethinking Economic Growth in Developing Countries,” John F. Kennedy School of Government, Harvard University, October 2004.

Rodrik, Dani, "Goodbye Washington Consensus, Hello Washington Confusion? A Review of the World Bank's Economic Growth in the 1990s: Learning from a Decade of Reform," Journal of Economic Literature, 44(4): 973–987, December 2006.

Vietnam Too Found Itself in the Slump

2009-03-11T12:43:00.000-07:00

I found the recent article on Vietnam written by the Economist under the tittle "In need of some snake-blood" disturbing, especially with its use of metaphor to depict Vietnam's gloomy economy. In an amusing tone, the author compares the country's need of regaining economic momentum to the traditional custom of drinking snake blood. Coupled with writer's troubling tone is the irony that Vietnam is in fact has no reasonable treatment for its decreasing exports, slumping economy and hiking unemployment rate. A stimulus bill at the size of 6% GDP (3% for China) was in order late last year; although, I doubt if it would help the economy to turn around at any time soon. The key issue here is that it takes time to stimulate either foreign or domestic consumption in a large scale global crisis as we are experiencing at the moment.

There is one interesting observation from the Financial Times' commenting on Vietnam and the current global crisis.

Globalisation was not supposed to work like this: the rich get poorer, while the poor get poorer still.

This is probably the first time in the development history of the Asia Pacific region that export-led-growth strategy reveals substantial problems of the market liberalization ideology. There are more to come.

*Image by the Economist

Saving the Dragon

2009-03-07T05:42:00.000-08:00

In the process of learning about China’s economic development, I often wonder if it was the right policy for China to cut its domestic spending on public services to suppress its currency while exporting most of its capital surplus to the West. Even in pure economic term, shouldn't economic growth equivalent with improvement of social welfare and income distribution? The answer is obvious- there is no promise of such upgrading even in an economy that has been growing at a rapid rate like China. After the Asian financial crisis in the late 90s, the Chinese government together with the rest of the Asia Pacific decided to protect its economy by maintaining a huge amount of reserves in foreign currency and bonds which ended up injecting an enormous capital inflows toward the US and Europe market causing an unprecedented equity bubbles. Ironically, together they became the partial cause of the current global financial crisis.

Last Thursday, Premier Wen Jiabao announced that China expects to meet it goal of 8% growth rate this year despite their declining economic performance. What did he have in mind to secure such ambitious growth rate?

To supplement for the fast decline in exports, the government has allocated $585bn (almost equivalent to 3% GDP) toward domestic spending and investment for the next 2 years. A big portion of this stimulus package will be spent on improving China deteriorating infrastructure especially on the national railway network. “Many economists believe such heavy infrastructure investment will delay the much-needed shift in China’s growth model towards domestic consumption and services, which would be more sustainable in both economic and environmental terms,” said Geoff Dyer of the Financial Times. I have some disagreements with this opinion.

While improving infrastructure will not give Chinese economy a quick boost in domestic consumption, it is of crucial advantage for China long-term growth. On one hand, the plan will enhance long-term development and improvement in the public service by providing transporting access to the remote regions of the country. Investment in heavy infrastructure will also lay a firm foundation to boost domestic consumption in the long term once local economy picks up. Next, improved infrastructure could further attract more foreign direct investment into the interior regions of the country where labor is still abundantly cheap. This will in turn further help to bridge the gap of regional and social differentiation rooted deeply in China's experimenting economic strategy.

Besides, the stimulus bill doesn’t disregard the need to stimulate domestic consumption all together. Some parts of the $585bn are expected to add an additional 24% to education, 38% to health care and 171% in investment for low-income housing this year.

With increasing lay offs from the country’s export processing zones, slumping economy and the tradition of holding high saving rate, it is challenging for the Chinese government to boost domestic consumption in a short term. By allocating money to infrastructure, the government will at least mitigate a portion of workers to construction industry and offset some parts of the growing unemployed labor force. More importantly, improvements of infrastructure and public services are particularly vital for China’s sustainable and long-term development. With much criticism, a part of this stimulus plan appears to hold credible value.

*Image from the Financial Times

A Capitalist's Crisis?

2009-02-26T04:25:00.000-08:00

Having born and brought up in a communist country as well as reading Marxism over the years in both social and economic disciplines, I can’t help asking myself the question: “What would Marx respond to this financial crisis?” The question lingered for weeks. Yesterday, I finally did a quick search on this subject. Unsurprisingly, there has been a revival of interest in Marx ever since the crisis started. Das Kapital, one of Marx’s most known analyses on the economy of capitalism have once again become the best seller all over the world. Last year, Phillip Collins of the UK Times published an article under “Karl Marx: did he get it all right?”. After a quick scan through Marx’s Ten Steps to Communism, the author gave Marx 3.5 over 10 for his assumed prophetic ability in predicting our financial crisis. Collin stated the obvious: Mark was right about the nature of crisis embodied in capitalism, but not much more.

I found the article a fun read with good review of Marxism, as well as was amused with Collins British sense of humor. But it did not satisfy my curiosity. What is more? What do our American Marxists think about this issue? Robert Brenner, a Marxist and economic historian of UCLA, seems to offer a solid yet provocative perspective through his interview with Seoul’s economist, Jeong Seong-ji titled "A Way out of the Global Economic Crisis?"

Back in December 2007, Brenner was almost prophetic about the upcoming financial crisis while at least half of the world was still relatively optimistic about economic downturn. By late December 2008, Brenner once again stressed that the crisis is much more substantial than most people expected.

According to the Marxian professor: “The basic source of today’s crisis is the declining vitality of the advanced economies since 1973, and, especially, since 2000.” Brenner contends that capitalists solved the problem of slowing capital accumulation by calling forth to the ever greater levels of borrowing to sustain stability. Thus, our economic system requires the crisis that has so long been postponed since “it’s by way of crisis that, historically, capitalism has restored the rate of profit and established the necessary conditions for more dynamic capital accumulations” said the Marxian historian.

The interview covers controversy issues such as the role of the US’s hegemony in maintaining the world order, Keynes monetary policies as a solution for the crisis, the depth of the Chinese crisis and its role in financing the our debts over the past decades.

In addition, the professor also made a comparison between Obama’s future performance as with Roosevelt’s and how our country can only change the system under a class struggle namely revolving pressure from the workers and unions. He asserts: “like Roosevelt, Obama can be expected to take decisive action in defense of working people only if he is pushed by way of organized direct action from below.”

In responding to Jeong’s question on Korea, Brenner maintains that as deep and troublesome the Chinese crisis is revealing, China may be able to contain the crisis better than Korea due to its low-cost labor force and large domestic consumption. This is due to both Korea and China reliance on globalization for their growth, which turn out to be a weakness at the moment. “It’s not necessarily because Korea is doing the wrong thing,” the author continues, “it’s because I don’t think there’s going to be an easy way out for any part of what has become a truly global, interdependent capitalist system.”

For Brenner, the only way for countries to reestablish healthy capitalism appropriate for growth and further capital accumulation is through strengthening the movement of labor organization. The class struggle promises to balance the distribution of power necessary for readjustment.
“So, again, the top priority for progressives -- for any left activists -- where they should be active is in trying to revive the organizations of working people. Without the re-creation of working class power, little progress will be possible, and the only way to recreate that power is by way of mobilization for direct action. Only through working people taking action, collectively and en masse, will they be able to create the organization and amass the power necessary to provide the social basis, so to speak, for a transformation of their own consciousness, for political radicalization.”

I wonder if one could find a more Marxian solution to our financial crisis than what Brenner contends. On the other hand, this approach has never been so out of reach given the current feeble and fragmented state of our labor unions and the worker’s strength in taking the action necessary to protect their long-term interest.

Robert P. Brenner and Jeong Seong-jin. Photo provided by The Hankyoreh

-----
Below are a few additional quotes that I also found particularly thought-provoking.

Disputing Keynes monetary policy in effectively changing the landscape of our crisis
"But there is reason to doubt that Keynesianism, in the sense of huge government deficits and easy credit to pump up demand, can have the impact that many expect. After all, during the past seven years, thanks to the borrowing and spending encouraged by the Federal Reserve’s housing bubble and the Bush administration’s budget deficits, we witnessed what was, in effect, probably the greatest Keynesian economic stimulus in peacetime history. Yet we got the weakest business cycle in the postwar epoch."

China and East Asia as the US’s largest creditors
"To have a significant effect on the economy, the Obama administration will likely have to contemplate a huge wave of direct or indirect government investment, in effect a form of state capitalism. To actually accomplish this, however, would require overcoming enormous political and economic obstacles. The U.S. political culture is enormously hostile to state enterprise. At the same time, the level of expenditure and state indebtedness that would be required could threaten the dollar. Until now, East Asian governments have been happy to fund U.S. external and government deficits, in order to sustain U.S. consumption and their own exports. But, with the crisis overtaking even China, these governments may lose the capacity to finance U.S. deficits, especially as they grow to unprecedented size. The truly terrifying prospect of a run on the dollar looms in the background."

The US hegemonic role in maintaining the world order
"I see the elites of the world, especially the elites of the capitalist core, broadly conceived as being very happy with U.S. hegemony, because what it means for them is that the U.S. assumes the role and the cost of world policeman."

Future possibility for the working class to influence our political environment
"The problem is that there is very little organization of working people, let alone any political expression. So, one can say there is this very big opportunity created by the change in the political environment, or the ideological climate, but that by itself is not going to provide a progressive outcome."

Summer Internship Opportunities for 1L Student Abroad

2009-02-19T13:25:00.000-08:00

When I arrived in Hong Kong in July last year for the Duke Summer Abroad Program at Hong Kong University, I was surprised to find that many Duke students had already finished a summer internship with law firms either in Japan, Korea or China prior to their arrival in Hong Kong. It turned out that the students were helped by their program director to land 4-6 weeks internship before our summer program. I thought to myself how nice it was to earn 6 law units as well as an internship abroad, all in one summer. I wanted to do that too, but it was already late into the summer, and I was afraid that I would not be able to do it. What were my chances?

After a bit of networking, I got a few words of advice from the program director that it is easier to find a summer internship in either Japan or Korea than in Hong Kong and China at such a late moment, especially for a US student who does not know the local language. I followed his advice and, without any real hope, sent out my resume and cover letters to five Korean law firms in the very last week of our program in late July. I didn’t think that I would be successful but told myself that I would apply anyway just so I wouldn’t regret not doing it. To my surprise, I was offered an internship with a mid-size international law firm in Seoul, South Korea within just a few days! Sometimes it is rewarding to maintain a “just do it” attitude.

Many of you are probably working hard to search for a summer job at the moment. I hope that some of you are considering working abroad, especially those of you who are interested in international law. I found it immensely enriching and eye-opening to live and work in a new place as well as to learn about the similarities and differences that exist between the United States and foreign countries. My last minute job search convinced me that there are more opportunities to intern abroad than one may think. For this reason, I thought I should share some tips and resources with you.

1. Prepare your resume and cover letters as early as you can and apply early. Hastings career center has a great database that will help you to locate alums working in your preferred region. You can contact them for advice and recommendation. Many alums will even help you find local jobs if they are available. It was this linkage that most of the Duke students found their summer internships with very prominent US law firms in Japan and China.

2. I used HG.org and Martindale to search for the firms by region and by practice areas. While doing your search, don’t limit yourself; apply to as many firms as you can. However, you should prioritize your options into region, country and area of practice ahead of time in case you receive a few different offers at once. Even in late July, I received two offers and was ready to negotiate for my best one. Strategize your game!

3. It is best to have a rough idea of the area of law that you are particularly interested in. While negotiating with my law firm, I was asked what field and region I wanted to work in. Later, the firm nicely arranged me to work with the chief attorney who was in charge of the firm’s South East Asian practice. The experience was beyond fruitful and instructive.

4. Be prepared to ask for any accommodation that you may need while being in a foreign country. Some law firms do have a specific program for summer associates, but most firms don’t, which means they may not be entirely familiar with your personal needs. I asked my firm to help me with finding accommodation that is close by the office. The company ended up offering me a small residence only 10 minutes by subway from the main office located in the center of Seoul’s financial district. Later on, they further paid for all utilities, transportation, lunch and even dinners whenever I stayed at work late. There were also a welcome lunch and departing dinner (with karaoke) at the end of my internship, but that was another story of building professional work relationship with your employer. I was told that some Korean and Japanese firms even pay stipends for your stay if they cannot offer you working salaries.

5. Knowing local language is preferred but is not required. Although there is an obvious advantage to speaking the language, it is important to keep this in perspective. Before my internship, I had never been to South Korea and don’t know any Korean. Yet, I did not have any language problems during my internship. If you are in a similar situation, I suggest looking for law firms that have strong international practices, which will almost guarantee you some learning experience and professional interactions.

6. Be prepared, be patient and be open-minded when you are in a new country. Everything will sort itself out gradually. Did I say that you will have a blast? If you trust the journey, it will show you the land where your imagination often fails to reach.

Sail your boat, have fun and best of luck!

Back To The Same Starting Point

2009-02-09T08:46:00.000-08:00

It's that time of my life once again, where I return to my root and start working on Vietnam's economic reform. Not that I have never attempted to run away from this subject to gain more breadth on other regions. Yet, this time I found myself coming back to that same initial starting point from my undergraduate years to look closer into Vietnam’s economic performance and its shortcomings. Why don't I want to work on China, India etc? Why Vietnam again?

In my last year at UC Santa Cruz, I wrote my senior thesis on trade relationship between Vietnam and China and how these two trade regimes complement and compete with each other in the world market (US and Europe). Although this first experience with academic research was extremely influential and rewarding, I have never reread the paper since it was finished. For some seasons, it isn’t something that I feel particularly proud of other than the fact that I was the first student who ever wrote a senior thesis in the Economic Department at UCSC and was invited to give a lecture on the paper in the very class that I sat on just a year before then. I guess part of the reason for such attitude is the fact that I further understand how complex and significant the problem is in understanding the reform structure and trade relationship that Vietnam sustains within the regional and the world economy. My gaining knowledge made me become ever humble with the unknown and unlearned phenomenon of Vietnam’s developing process.

Some time last week, I decided to write my Master thesis on Vietnam's economic reform again. While searching for the data and literature, I am bombarded with so much information that I haven’t exposed to in quite a few years. There is this bittersweet flavor in digging through the literature on trade reform, WTO benefits, FDI and institutional framework of the country. It's sweet because I am working toward a set goal with challenging and applicable subject matter, but bitter from seeing how much more that the country needs to catch up and yet, the institutional framework is so lacking in order to bridge any major economic gap in the near future. For now, here are a few issues:

1. What are the market failures and advancements created from government rents in major sectors?
2. How Vietnam’s export led growth strategies prevents technological catch up necessary for industrialization? What are the roles of FDI and government subsidies in Vietnam long-term economic development?
3. Two years after Vietnam’s access to the WTO, what are the benefits and barriers to country’s development process?
4. What are the standing of Vietnam’s institutional reform in enhancing property rights and enforcing commercial contracts? Being far from the standard of other developed countries, what can be done to speed up institutional reform in Vietnam? Are there lessons from China’s legal reforms?
5. Should Vietnamese government place major attention on curbing corruptions? What are the policy options to do so given our limited understanding of current market failures generated from government interventional rents?

Hopefully, my research will paint a clearer picture than where it appears to be at the moment. For this reason, lots of entries on this topic are forthcoming.

Image Of The Day

2009-01-28T16:32:00.000-08:00

If you could make sense out of the image above, I'm almost certain that you would be in great shock! I could not believe for a moment what I saw. The chart features the gap in capital adjustment of all the major banks before the crisis and where they are now at the moment. For now, it looks like HSBC owns the largest capital in the world. Some lessons must be learned from its business practice and corporate governance. Meanwhile, something can also be said about our beloved Citi Group- incredible!

What Is More?

2009-01-25T06:26:00.000-08:00

If you have not given up on following distressing news from the credit crisis, George Soros (a well respected Wall Street guru) recently published his analysis regarding our government's options on bailing out the banks. After watching Paulson helplessly aggravated the situation on his first round of spending the Tarp money, Soros sees that our leader has two options: (1) nationalizing the banks or (2) buying out the toxic assets and leave the banks to the market force.

Soros asserts that temporary nationalization is the best choice though extremely painful and costly, yet the Obama administration is being forced to choose the second option even with the knowledge of its long term and systemic flaw. I sometimes wonder how "bold" can our nation be to recover from the crisis? There are considerable risks associating with our daring policy choices, and at some point the opportunity cost must outweigh the benefits. On the other hand, in this picture, we have little options.

Unemployment is expecting to be in double digits soon. We are having job cuts across sectors and this will not slow down in foreseeable future. Assuming that Obama’s rescue package will hit hard and become as effective as he claimed (although some economists are having great doubt that it's substantial enough), it will still take some time for the market to response.

I'm nervous about the world. This unprecedented crisis is spreading fast. In the UK, after a series of bail out, last week the Royal Bank of Scotland is running out of reserves which will soon be nationalized by the British government. But then, can the UK hold on when "the median ratio of debt to equity in big UK banks is more than 30 to one"? There are suspects that the Sterling may eventually be in crisis. Italy is struggling for running out of foreign reserves, but isn’t it the same with the majority of Europe at the moment? Lots of blames are pointing toward the European Union for not taking sufficient measures and actions- but what more can be done? In the Asia Pacific, China and Korea both are increasingly unstable. This is not to mention Thailand, North Korea and Sri Lanka to name a few. The political tension between the US and China over foreign exchange policy is ever this hostile, and I suspect it won't just stop here.

I am also concern about the long term impact of our budget deficit. We will pay back in pain to bridge the budget gap after the economy recovers. However, our government must continue to spend until the market resumes and runs relatively independent from government intervention- spending cannot be suspended at this moment.

I am even more apprehensive over the institutional framework that will be set up to adjust the market system by president Obama in order to potentially prevent similar credit crisis. On a broader scale, the IMF too is in great need for structural reform to responsively and constructively shape the future world economy. Policies always have much longer effects than fiscal adjustments. Hopefully, our nation and the world will not become more protectionist than it already is. I fear that we will be disappointed on this matter. History often repeats itself.

And last, isn't the most worrisome issue that we haven't seen the bottom of this global calamity just yet. What's more?

Budget Allocation

2009-01-11T20:03:00.000-08:00

If you have any curiosity regarding ways that our government could make use of the stimulus budget effectively, Joseph Stiglitz (2001 Nobel Laureate) seems to have some answers. In his most recent FT article, Stiglitz argues against household tax credit, except for low income households, in which Obama is now allocating about 40% of the budget.

In fact, Stiglitz is not the only economist who holds that the stimulus package should focus on increasing investment and future productivity by increase spending on infrastructure, education, technology and investment credit. He just has a nice, easy and readable way to feature his argument that is approachable for all.

Changing His Tune?

2009-01-09T14:23:00.000-08:00

Written for the Financial Times recently on a commentary named "Obama On Trade: An Alarm Sounds," Professor Bhagwati is concerned how the president-elect, Obama, is showing signs of protectionism, especially with trade policies that may be in conflict with the WTO's. The Detroit bail out is unambiguously an act of industrial protection, yet our president-elect had failed to reassure the rest of the world that such action remains consistent with the WTO's rule of law and does not violate the US free-trade agenda.

Bhagwati argument is sounding: any governmental intervention on free trade activities under forms of subsidies and strictures against bilateral trade agreement will eventually backfire at the US interest and welfare gains. This is a controversial topic, much more in academia than you could imagine for a valid reason. Until today, the stand for fair and unmitigated free trade policies is held strong and dear by many of my much respected trade economists.

It Matters More How We Will Come Out Of This Crisis

2008-12-31T16:39:00.000-08:00

Harvard's political economist, Dani Rodrick, today posted some new thoughts regarding 2009. In his entry named "Looking Forward To 2009", Dani detailed four major determinative tickets that may make the world better or worse in the upcoming year:

1. Will the U.S. policy response be “bold” enough?
2. Will Europe get its act together?
3. Will China hold together?
4. Will there be enough global economic cooperation?

Other than the first item, the other big three are major on going issues that have been much discussed across disciplines. Yet, during this historical and transitional period, they become ever apparently crucial.

Many of the concerns now revolve around whether the U.S. is heading toward a second Great Depression, which very much may drastically increase the existing international economic, political and social instability. Social scientists are hoping that for as much as we understand how the world functions today, much more than our grandparents did during the Great Depression, we will save ourselves from it. My hunches are following.

First of all, the Obama administration will response boldly to the current crisis, though such responses are facing uncertainty as to whether the other developed countries react consistent to the U.S. strategy. In addition, acting boldly should not mean carelessly ignore the future potential cost of the rescue package?

Secondly, the global financial crisis will not cure the division among European countries. It appears to be worsening, especially when the European Union cannot continue to prove its necessary existence to its skeptical members.

In regards to China, the communist party has now put aside its strategic sustainable development focus to concentrate on maintaining its growth rate. If China growth goes below 8% rate, it is arguable that social upheavals will arrive. Recently, a stimulus package has been announced to supplement job losses and exporting demand from the global market. Yet, the country has already seen a growing amount of social unrest mostly scatter around industrial zone where manufacturing jobs are being cut steadily. I have much hope that the Chinese government will be able to tame social uprising and minimize the impact of the current crisis. However, placing fiscal stimulus on performance of state owned enterprises (SOEs) as one of the party's major strategy will create tremendous stress on sustainable development causing the issues such as degrading environment, resource shortage, social and regional polarization to explode further. China will face much more complicated setbacks on this subject once sustainable development topic comes around the next time, i.e. when the global crisis is resolved.

Finally, I suspect that this transitional period will cause an increase in global cooperation, although, I fear it is creating more local and regional tensions than the past years. Why? I don't know, I just intuitively feel that it is happening. However, with the most recent world events, once could see such intuition has validity- Israel arm force attack on the Gaza strip, the India-Pakistani turmoil, African wars etc. Asia Pacific is probably the least unstable region at the moment, which may explain why it has been holding up relatively well during the global financial breakdown.

At the moment, I am not as concern if we will come out of this crisis as how we will come out of this after 2009. It is inevitable that this transitional period means it all.

Morality vs. Pragmatism

2008-12-26T01:43:00.000-08:00

In economics, the truth is rarely pure and never simple-Oscar Wilde

Martin Wolf recently wrote "Keynes offers us the best way to think about the financial crisis," an excellent commentaries named on our current state of economics downturn and how one should approach the issue with a pragmatic eyes instead of using moral approach. I cannot agree more with him.

Over the years, it is appeared that people have expected more from the market system than a reflection of consumer and business behaviors. The role of the institution in the market system suddenly weights toward fairness and righteousness rather than increased efficiency and flexibility. This pattern of behavior buries the market system and take away its inherent resilience needed during the systemic downturn as we are experiencing now.

Wolf calls for a preservation of "an open and at least reasonably stable world economy that offers opportunity to as much of humanity as possible." The fear is clear: if we were to take away the free market system now, things will all quickly go down to the drain together.

In Defense of Alan Greenspan

2008-11-26T05:49:00.000-08:00

As the financial crisis deepens and spreads throughout of the world economy, the blame game starts to intensify and Alan Greenspan, the Federal Reserve’s chairman of 18 years who stepped down in 2006, became an unavoidable target.

People blamed Greenspan mainly on two reasons:

1. Greenspan had opposed additional regulations on derivatives later led to the proliferation of sub-prime mortgage.

2. Since 2002, after Enron's major accounting standard, the Fed dropped the rate to 1%. This sustained low interest rate is argued to cause the housing bubble, which collapsed in 2007.

Greenspan convincingly argued his position on both issues on his recent memoir: The Age of Turbulence; though he admitted being “partially” wrong in opposing regulation on derivatives in his Congressional testimony on October 23, 2008

"Those of us who have looked to the self-interest of lending institutions to protect shareholder's equity -- myself especially -- are in a state of shocked disbelief," Greenspan asserted. Referring to his free-market ideology, Greenspan said: “I have found a flaw. I don’t know how significant or permanent it is. But I have been very distressed by that fact.” Rep. Henry Waxman (D-CA) then pressed him to clarify his words. “In other words, you found that your view of the world, your ideology, was not right, it was not working,” Waxman said. “Absolutely, precisely,” Greenspan replied. “You know, that’s precisely the reason I was shocked, because I have been going for 40 years or more with very considerable evidence that it was working exceptionally well.”- Wikipedia.

I sometimes ask myself: “How would our economy be without Alan Greenspan?” “It probably would be much worse, ”I answered. I think people had given Greenspan too little credit for what he has done by expecting the impossibility- accurately predicting and adjusting monetary flow in response to the largest and most sophisticated and dynamic economy in the world, at all times. What we had experienced from longest the boom of almost a decade, which encompassed the dot-com phenomenon and technological advancement starting from 1996 to 2000, was unprecedented. Such event of no tracking record set a different problem to policy makers and economists to assess its boom-bust cycle. It is the challenge that Greenspan and his team had to faced through out.

In response to the rigorous critics to Greenspan’s commentaries on the Financial Times, Martin Wolf defended Greenspan by explaining why Greenspan became the involuntary scapegoat who bears the criticism of the current financial crisis: (1) it's more painful to admit that the circumstance was indeed out of the US possible control, (2) it's easier to blame it on the Fed than to admit one's own responsibility; (3) can there be a better excuses than this to ask Washington for financial rescue?

The blame game will not only take us deeper into the crisis but also create irrational pressure on the government to implement unreasonable policies that will cause damages to the market for years to come, i.e. strict regulatory constraint on the market.

"...Free competitive markets are by far the unrivaled way to organize economies. We have tried regulation ranging from heavy to central planning. None meaningfully worked. Do we wish to retest the evidence?" said Greenspan.

Here in London, as working through the economic world of numbers and probability at SOAS, I found myself frequently frustrated as to how much an economist could do and how enormous and complicated the problems imposed in the free market system are. We almost always rely on a collaborative works from various groups of economists in order to make any reasonable assessment to the problem presented. Asking Alan Greenspan to the mystic Oracle in the modern world, regardless how close he was to be one, is a doomed spell of irrational demeanor.

The Principles of Uncertainty

2008-11-25T01:10:00.001-08:00

Maira Kalman is one of my most favorite artists (besides Monet) of all time. Her art is the flowering field that opens up thoughts, motivations and creativity. I have read her series The Principles of Uncertainty from the New York Times monthly post multiple times. Yet, every time I reread the series, it's like reading a brand new book again. My hat is off to Kalman!

I too am criticizing.

2008-11-22T11:15:00.000-08:00

I went to the Barrister’s Christmas party at a Chamber in Chancery Lane last night and two things struck me:

1. England is a nation full of pride. I feel sick of it!
2. The question followed by "where did I come from?" is almost always: "What do you think about Obama?" Popular culture! I felt sick of this as well!

I know I’m being critical, but some people here don't really have more to say to me other than showing me how awesome England is and how little they know about our politics. One well-respected barrister even asked me: "Did you vote for Bush or for Obama?" I thought to myself: "WHAT??? Bush???" That tells how much they know. Another young barrister who was heading to King’s Cross with me on the same bus was trying to convince me that charisma is more important than experience and that is what Obama has over Hillary Clinton. Unbelievable! Okay, I know I should not generalize, and I know we, American, are also ignorant with lots of things about Europe as well as other parts of the world. Many high school students will have a hard time spotting where the UK is in the map of Europe. But oh gosh, those guys trying to be smart, intelligent, well-read and acting as if they know the world while more often present most uninformed, ignorant and illogical reasoning made me laugh. And they thought that they belong to the circle of the elite? Unthinkable!

No wonder those commentators in the Financial Time take every possible the opportunity to criticize lawyers as if lawyers are well-deserving criminals who destroy national wealth and ideologies. Those commentators either found criticism the best way to catch the mainstream’s attention or are simply empty heads. They too are no better!

In retrospect, I had a great time with the people that I met during my trips to Wales and Scotland. Those folks are genuine, hospitable, humble and fun to be around. London, for some reasons, presents a peculiar aspect of the UK that I found more than amusing.

I'm sorry Sir, Obama was running against John McCain, and charisma has never been the most important factor to win a party's nomination for the presidential ticket in our campaign history. May be you should stop talking and start listening or even better, read some news on your own.

The Battle for Henry Paulson's $700 billion Bill

2008-09-29T15:36:00.000-07:00

To everyone's surprise, the Congress today rejected Paulson's rescue plan by 228-205 vote. The Economist in this week's edition supports the plan mainly argues that taxpayers themselves are employees and consumers who rely on a stable economy. Consequently, the benefit of the bill will eventually even out its cost. The paper asserts that the bill is indeed much needed and U.S. government should act quickly.

At the moment, the market is experiencing "the worst single day dropped in a decade." I admit that the market reaction to the failure of the bill initially convinced me that the bill is necessary. After much research, I found out that, as always, I can't always trust the market for its irrational behaviors.

A letter signed by many well-respected economists from a collection of prestigious Economic schools was sent to the Congress on September 24 urging the Congress to take extra time in considering the bill.

To the Speaker of the House of Representatives and the President pro tempore of the Senate:

As economists, we want to express to Congress our great concern for the plan proposed by Treasury Secretary Paulson to deal with the financial crisis. We are well aware of the difficulty of the current financial situation and we agree with the need for bold action to ensure that the financial system continues to function. We see three fatal pitfalls in the currently proposed plan:

1) Its fairness. The plan is a subsidy to investors at taxpayers’ expense. Investors who took risks to earn profits must also bear the losses. Not every business failure carries systemic risk. The government can ensure a well-functioning financial industry, able to make new loans to creditworthy borrowers, without bailing out particular investors and institutions whose choices proved unwise.

2) Its ambiguity. Neither the mission of the new agency nor its oversight are clear. If taxpayers are to buy illiquid and opaque assets from troubled sellers, the terms, occasions, and methods of such purchases must be crystal clear ahead of time and carefully monitored afterwards.

3) Its long-term effects. If the plan is enacted, its effects will be with us for a generation. For all their recent troubles, America's dynamic and innovative private capital markets have brought the nation unparalleled prosperity. Fundamentally weakening those markets in order to calm short-run disruptions is desperately short-sighted.

For these reasons we ask Congress not to rush, to hold appropriate hearings, and to carefully consider the right course of action, and to wisely determine the future of the financial industry and the U.S. economy for years to come.

In addition, the Financial Times also lays out major weaknesses of the bill which are not made known to the public.

This is such a historical period in US and global financial history. I did not foresee that housing meltdown could potentially lead America and the world into such deep financial recession. There are prices in each policy. The bill must be passed, but we should not hastily save the financial bankers from their faulty decisions and ignore the long-term cost to the taxpayers. At the very least, Paulson and his team should work harder to amend the weaknesses of the bill instead of asking for just "a blank check."

The Modern Face of a South East Asian Tiger Once Created "The Miracle on the Han River"

2008-08-14T07:00:00.000-07:00

If you ever see the activities around the subway station in the Sangnam area of Seoul from 7-9am each morning, you would understand why South Korea miraculously became an Asian Tiger in just 25 years. People are fast, industrious, competent and very serious here. With an incredible fast-pace life, everything is supposed to be done yesterday.

It is normal for the middle income workers to work more than 10 hours and sometime past midnight here especially in the legal field where I'm being a part of at the moment. The youth is occupied with social rankings, moving up corporate ladders, wage increase and production while letting their personal life. They knew they could not sustain but all of them seem to determined to try until the very last moment. That's the spirit almost preconditioned for the incredible growth that we got to see from South Korea that is once called Miracle of the Han River.

I sometimes wonder what is the benefit of this social wealth created through a generation of industrious people who does not seem to have time for anything else other than work here. They are kind and gentle people, but happiness seems to be a concept rather than an actual experience in this country. Where does the wealth go? A great portion of the newly generated wealth would go to the the hand of the powerful Chaebols and the government's fund. So surplus will eventually concentrated in a powerful top quintile of the pyramid and slowly get redistributed to the others by ways of tax cuts and social benefits. Did the new Korean generation get into this irresistible engine by choice or accept it even before options were given to them?

Korea committed to produce generations of hard-workers to build up national wealth. Is this process truly desirable? I never really ask myself this question until I saw an attorney here at AJU getting only one day for his honeymoon after marriage and working until 8 or 9 pm every day before heading home to see his newly born child. He said that, 8 or 9 pm leave was a favor granted to him since he will soon have to leave Korea on regularly scheduled 3 weeks business trip. What a life!!! I feel very sad for him and his family.

Industrialization has its price, just like almost all decisions have their opportunity cost. Korean labor forced is rated #1 in all OECD countries to work the longest hours. Seeing the attorneys at work ate their lunch so quickly and stayed so late into the night suddenly touched my heart. I feel saddened. Needless to say how much I respect them and the miracle growth of this beautiful country. I love and cherish every day of my life being here. But I just wish there are better options given to the people here one day.

Why not, isn't it a part of the growth process though Christine?

Bad Faith

2008-08-14T03:35:00.001-07:00

Why are we living in this world of confusion and full of conflicts but accept it as it it's natural, inherent and unavoidable.

Social norms are there to maintain order, enhance growth but go completely against the inherent desire of human beings. Within such confusion and conflict, one has to decide for herself if she will conform and live her life in bad faith but could be "at peace" with the society or to fight against it in order to live true to herself.

Fight Christine! Don't let go. Neither accept it nor give up! This stupid circles is endless, detrimental and hopeless.

When civilization started, rationality was embraced. When I fail my rational mind, pain is inevitable. Be strong and live it Christine.

A More Perfect Union

2008-04-21T16:42:00.000-07:00

Wow...my head is spinning with thoughts, aspiration, hope and admiration. I have just finished watching Senator Obama's speech, A More Perfect Union, addressing the racial issues in our country in Philadelphia on March 18. Teary eyes and goose bumps. I am speechless.

The speech touch my mind and heart in every possible way. It was not about Obama or Hillary. It was not about Democrats or Republicans. It is about the peculiar character of racial issue and the hope for a better unification for the good of all.

Whether you are a liberal, conservative or moderate, please spend sometime to watch the speech that undeniably plays a role in shaping the landscape of our national politics and civil conscience. While watching it, observe your reaction to understand your own either distinctive or subtle racial orientation.

And...More Tax To Come

2008-04-21T16:41:00.000-07:00

The last frontier?

An article from news.com called "Tax-free Internet Shopping Days Could Be Numbered" recently discusses a proposed bill in Congress to tax online purchases. Accordingly to the article, tax is levied only if the online store has offices in the state you are in and making the purchase. The proposed bill would force sellers whose sales exceed $5 million annual to keep track and collect sales tax.

I think the idea of taxing online purchases is very attractive. The state can increase a tremendous amount of revenue especially when more and more consumers are shopping online nowadays. However, I could see some shortcomings of doing so.

First of all, how could the IRS you keep track of the income generated from online sales? I guess, this issue is just as slippery as tracking cash purchases.

In addition, the states that impose online sales tax may discourage online shoppers to purchase products from merchants that reside in those states, which in turn would effect local economy. I normally don't make my purchase from vendors that impose sales tax online. May be the innocent policy of not taxing is not that innocent after all.

Lastly, buying free-taxed items online has indirect social economic benefits- it enhances buyers to conveniently buy more stuffs and helps vendors to limit operational costs. That means more efficient transactions and improved quality of life. Imposing online tax may take away some of those benefits.

Personally, I doubt that we could get the free ride from purchasing tax-free products online that much longer.

Americans gather at the base of the Capitol building in Washington, D.C., to protest the income tax and federal government overreaching. Rep. Ron Paul spoke at the rally earlier in the day.
(Credit: Declan McCullagh/News.com)

Obama On Free Trade

2008-04-15T09:42:00.000-07:00

Op-ed columnist, David Brook, wrote an article on the Times called "A Speech About Nothing" today discussing Obama's recent speech addressing voters in Pennsylvania, one of the states that is experience economic complication from economic downturn and job loss. Brook presented his realist view, not personally attacking Obama but bitter about the popular culture that caused the campaign manager and his boss to follow the mainstream by address international trade issue as a major factor causing job lost and national economic slumps.

According to Brook: "Economists differ over how much outsourcing will change the American job market in the future, but there is little evidence that trade has been a major cause of job loss or even wage stagnation so far. As Robert Z. Lawrence of the Peterson Institute for International Economics wrote in a recent study: 'The recent increase in U.S. inequality ... has little to do with global forces that might especially affect unskilled workers — namely, immigration and expanded trade with developing countries.' "

Brook commented that the ideas Obama sketched out in regards to the danger of free trade in his speech aren’t dangerous. "They’re just trivial," said the columnist.

I like it how Brook raised a sad reality about the clichés of economic populism in such a sarcastic manner. He said: "What I don’t understand is why the political consultants prefer this kind of rhetoric. Aren’t there windows in the vans they use to drive around the state? Don’t they see that most middle-class voters are service workers in suburban office parks, not 1930s-style proletarians in the steel mills?

American voters aren’t so stupid as to think their problems are caused by foreigners and malevolent lobbyists. When Obama speaks down to his audiences, it makes me so bitter I want to cling to my laptop and my college degree."

I personally think that Brook overestimates middle class voters as to their ability to reason and their independence on the influence of the press. In the end, there were still close 50% of voters that supported for Bush in 2004 after witnessing him lie about the war in Iraq and his illogical connections between Saddam Hussein and Al Qaeda (I won't go further than this). Obama decided to ride with tidal flow which was the very key that gave him the Hollywood popularity that's he's entertaining today. I wished he had the gut to stand up, speak the truth and tell the voters that they need open their mind to adverse reality. To be fair, Hillary travels on that exact path herself. May be Brook and I are asking more than what American politics could serve.

Senator Barack Obama (D-IL) speaks to supporters at the Community College of Beaver County March 17, 2008 in Monaca, Pennsylvania. Getty Images

Bad Faith & Existentialism

2008-04-06T20:32:00.000-07:00

I don't know if history has ever had experience this divergence of social trend as we are experiencing nowadays. It probably did. What I found completely interesting is that while there is a growing group of people who never pick up a book or news papers but choose to spend the majority of the free time watching McDonald and KFC's advertisments on the TV, there are another growing group of young people who are searching for their own meanings of existence. The duality works the same way as more people start to practice Yoga and meditate while our nation still maintains an incredible tolerance for the war supporters in many parts of our country. The New York Times reports today that there are growing number of students who either switch or become more interested in majoring in philosophy in compare with the past decade. Good for them! Those students will come out as great thinkers, lawyers, and writers of our time.

The discussion David L. and I had about Descartes and Jean-Paul Sartre 's theory of Bad Faith went no where when I tried to explain to him that freedom exists at every instant of our conversation; as long as we realize such truth. Despite my narrow minded theory of the nature of the Self, David opened my eyes of philosophy's mysterical's world- so vast that one could not help getting lost within it. I should get back to work!

Random thoughts

2008-03-22T21:40:00.000-07:00

Ideas and reality are often in conflict with each other. The master is the one who could artfully apply both and bring out the benefit of such application. We're living in two (or more) different realities that are in complete conflict. There is only one that is real while the other is necessary. The master is also the loner who walks between the two realities completely awaken while the others are sleeping.

We love to hold on to things, define things and break ideas out until we exhaust their very inherent nature. May be it is best just to leave things as they are. The more intangible, indefinite and equivocal ideas are, the more they open up possibilities and understandings. Unsurprisingly, this is entirely at odds with what the society is telling us.

I'm being recalled of the question that Sal Breiter asked us (the innocent sleepers) on the first day of his class: will you take the red pill or the blue pill? The 19 years old Christine then said that she believed the result would be exactly the same in spite of the choice. I wonder if it's still my answer today?

Will you take the red pill or the blue pill?

A Conservative Observation on Contemporary Issues

2008-03-17T09:06:00.000-07:00

Freakconomics Blog today published its conversation with Newt Gingrich, the former speaker of the House, on various issues regarding government intervention, tax, health care reform, foreign relation etc.

Gingrich criticized our health care system and commented that most conservatives have fallen into a trap when it comes to environmental issues. Gingrich also offer some interesting insight regarding the relationship between politician, as in his case: a conservative politician, with the media.

Q: How do politicians like yourself deal with the media? As previous comments reveal, anything that can be spun will be spun. Do you restrict your life to a bubble? Honestly, everything you say and do can and potentially will ruin your career. I can’t imagine the pressure of living my life in that sort of way.

A: A long time ago, Donald Rumsfeld offered some useful advice. “If something can’t be changed,” he told me, “it is a fact, not a problem. It’s what you do about it that is a problem.” I can’t think of anything to which this advice can better be applied than the relations between the media and politicians, and especially conservative politicians. A politician’s relationship with the news media is complicated, because it is a bit of a symbiotic relationship. In today’s media environment, you need earned media to succeed.

One interesting quote from Gingrich regarding his advice for the younger generation:

Q: What advice would you have for a young conservative right out of college who wants to make a positive change in America? Where would one even start?

A: There are so many ways we can make a positive difference in our communities. It’s one of the beauties of America. My main piece of advice is to find something you enjoy doing because, to get good at it, you’re going to have to do it a lot, and if you don’t enjoy it, you’re not going to do it enough to get good.

This is easier said that done. One would think it's trivial to know what one enjoys doing. Until, she finds out about all of the possibilities that lay in front of her. I found some of Gingrich's arguments interesting but still have not had the time to think through all of them. This is a buzz for a good read of the day.

*Note to myself: Gingrich also listed a few books that he strongly recommends. Although I have read and am owning a few of them, I should look into the rest of the book during this summer break.

2008-03-09T14:47:00.000-07:00

I have just read an interesting book called The Dip by Seith Godin. In his book Godin argues that the Dip- a temporary setback that you will overcome if you keep pushing- is in fact an opportunity that sets superstars apart. "If it's worth doing, there is probably a dip," said Godin. I don't entirely agree with all of what he says in the book, but it is a refreshing reminder that there are incentives to face the dip and conquer it. The statements quoted from the book below is a slight recap of the book.

-All our successes are the same. All our failures, too.
-We succeed when we do something remarkable.
-We fail when we give up too soon.
-We succeed when we are the best in the world at what we do.
-We fail when we get distracted by tasks we don't have the guts to quit.

A Declaration of Independents

2008-02-20T09:45:00.000-08:00

There is an interesting and informative article from the Economist this week called “A Declaration on Independents”. According to the article:

"Over 30% of Americans call themselves independents—more than call themselves Republicans and about the same as call themselves Democrats. These independents are younger and better educated than the average American. They are pragmatic, anti-ideological and results-oriented, hostile to both Big Labour and Big Government but quite prepared to see the government take an active role in dealing with problems like global warming"

Oh wow! Perhaps I have been ignorant about this independent group. 30% is such a big number and it's even likely that this number will continue to rise. This group of people will surely play a major role in the upcoming election. So far, according to the Economist, the independents prefer Obama to Hillary and McCain is their favorite Republican. If the democrat party wants to win the electoral votes, it's crucial for them to choose the candidate that is most favored among this group. The Economist asserts: "Mrs. Clinton's biggest problem is not that she is being out-campaigned by the silver-tongued Mr. Obama. It is that she seems to belong to the previous era of American politics—the one of battling political machines."

My only problem with Obama is his lack of experience in international affairs. As vulnerable as our economy is at the moment, the American is still playing a central role in mediating the world’s peace and global welfare; although, it does not mean that Obama isn't wise enough to elect a cabinet that is capable of helping him in this arena.

Creators by Permission

2008-02-13T08:23:00.000-08:00

"We're creators by permission, by grace as it were. No one creates alone, of and by himself. An artist is an instrument that registers something already existent, something which belongs to the whole world, and which, if he is an artist, he is compelled to give back to the world." -Henry Miller, Sexus

What a mind! Not only the artist is compelled to give back to the world but all of us, the loners looking for the path of truth. There is this one sleeping world that artists wander as if they are the only awaken beings. Reflections bring joy, pain, fulfillment and responsibility all together and sometimes all at once.

* Impression by Claude Monet

The Fine Line

2008-02-12T11:00:00.000-08:00

The more that I read about the law, the more I feel confused about judicial decisions. There are so many cases where I found myself having difficulty to take side in determining what would be a just holding. What is going wrong with me? I am concerned. What they teach me in law school is the ability argue both sides. That is the skill that people often claim as "thinking like a lawyer". Such doctrine is very much a part of our adversary system where every factors can be taken into consideration if they are presented timely and reasonably and that someone is not at fault until he is proven to be wrong under the law.

It seems as if the lawyers are not allowed to take side professionally. The law becomes a relative concept that somewhat depends on individual interpretation which in turn based upon his or her personal and professional value and experience mixing with the often vague language of the statute. Marcus often says that this adversary system has its own flaw (mostly related to cost) but the alternative is much worse. I think, the issue with the adversary system for lawyers is the lack of option to take side. This is challenging for personal value and morality. It is sad, but also true, when they say that lawyers can turn back into white.

For example: I'm reading a case named Hauer v. Union State Bank of Wautoma discussing the defense of a mentally incompetent plaintiff. Being trained in economics, I think voiding a contract for mental incompetent party is extremely inefficient and generate a huge amount of cost to our society. On the other hand, the lack of such law can easily lead to injustice. People would take advantage of disadvantageous individuals were it not for the protection of the law. What's a fine line!

This proves how powerful judges are and what a crucial and difficult role that they play in monitoring and enhancing a just and reasonable society.

The Geography of Recession

2008-02-07T12:08:00.000-08:00

A new article from the Economist this week called "The Geography of Recession" informatively features how the highly anticipated American recession effects individual States. The economy shredded 17,000 jobs in January mostly concentrated in industrial Midwest states and states which were heavily influenced by the housing bubble: California, Nevada, Arizona and Florida. California unemployment rate went from 4.8% to 6.1% in the past year. This number will continue to rise if the merger between Microsoft and Yahoo successfully closed as well as the continual diving housing price. Consequently, there is a great stress on California budget deficit, which may undermine Schwarzenegger's health care reform.

Michigan, the state with manufacturing strongholds, painted a rather serious picture where it has the highest employment rate in the country at 7.6% and the third highest foreclosure rate. The situation in Michigan is more serious in the sense that it can be difficult to replace manufacturing jobs in the age of globalization today. When the housing market recovers in CA, NV, AZ, FL, Michigan will still face the puzzle of replacing the lost manufacturing jobs, which are unlikely to return.

Montana, on the other hand is witnessing 4% growth rate in the past five years due to mining, farming and tourism. Additionally, "a belt running from Texas north-west across the Great Plains and the Rocky Mountains has been doing particularly well, thanks to soaring exports and high commodity prices."

The Economist argues that this current potential recession will make it harder for workers to migrate to other well-to-do states since it is difficult to sell houses during the plunge. What a sad trap for both workers and the needy States! Undoubtedly, this picture will play a significant role in our ongoing presidential election this November.

*Source: the Economist

Measuring Up

2008-01-28T01:03:00.001-08:00

"The real measure of our wealth is how much we'd be worth if we lost all our money" - John Henry Jowett.

Since highschool, I often entertain the idea of being a begger or a homeless girl for a few days to just experience that side of the our society. I have seen people admiring my dress, well-matched shoes and expensive coat. How would people look at me if I were to be a dirty, smelly, messy girl on the street? Will they give me money because they feel pity for me, because the society tells them to do so, or simply because they want to feel good about themselves? I want to look into their eyes to find the answer, or at the very least, to see if they would look back into mine. How would it feel to have no hope, money, health and social status? How would I feel when someone perceived me as a poor, ugly, uneducated, pity and worthless woman? 2:13 am-The wind is blowing forcefully against the windows of my living room. Are there people without home during a cold stormy winter night like tonight? Did they choose such life voluntarily? I am afraid of the answer.

A Dangerous Hype Of An Economic Downturn

2008-01-21T08:45:00.001-08:00

Unemployment rate has just jump from 4.7% to 5% in December due to private sectors had shed workers for the first time 2003. American economy is week and talks on recession are occurring over coffee chat everywhere. Even my brother asked me if it is really true that American economy is heading to recession. It is inevitable that the major cause of this downturn came from housing slumps and banking issues over credits. Carmen Reinhart of the university of Maryland argues that our banking crisis follows very similar pattern as previous 18 banking crisis in the rich world.

“Each blow-up is preceded by rising home and equity prices; an acceleration in capital inflows driven by optimistic foreign investors; a rapid build-up of debt; and—immediately before the storm hits—an inverted V-shaped path for the economy, with growth first picking up and then faltering. The years just before the start of the subprime meltdown fit the Reinhart-Rogoff template remarkably well. Indeed on most criteria, the portents of trouble were more marked than in past crises. House prices rose more sharply in real terms. Equity-market gains were more persistent. Capital inflows picked up too, though they were already running at an alarmingly high level. America's current-account deficit was much larger, relative to GDP, than in a typical crisis candidate.”

Housing prices is now falling which threatens the borrowers for loosing housing equity revealing depressive credit market that is causing bank losses. There is good news. Recent interest rate cut from the Federal Reserve Bank eases investors and businesses slightly. The financial market also expects the rate to fall more than a percentage point this year to below 3%. The weak dollar and strength in emerging economies will indeed boost exports. American economy may avoid a server downturn on a landslide.

As an article in the Economist asserts: the issue isn’t stop at whether our current downturn will qualify as a recession but how long it will last. “If the downturn endures, even that could prove optimistic. Rapidly rising defaults and losses could yet trigger another financial-market panic” Put together falling asset prices, rising defaults and tighter credit and it is hard to see how the economy will bounce back quickly. At the moment, monetary policy has proven to be helpful, but it cannot reverse the credit cycle or the bursting of the housing bubble. The excesses of the last few years can hardly be adjusted without a “long, hard slog.”

My main concern is that the financial-market panic, which is increasingly appearing at the moment, will alter consumer behaviors and business practices dramatically in a way that would spread the downturn leading a major regional if not global financial crisis. I am recalled of the financial crisis in South East Asia began in 1997 with Thailand devaluated its currency, the Bath. The Asian crisis dissimilated through panic irrational behavior of regional consumers and investers. At the very least, reaction toward a mild short recession will trigger very different set of behaviors in compare with a long durable downturn (estimating at three years duration for now.): spending will be slow, investment will fall and unemployment will continue to rise. I am concern of a long economic downturn. However, I am more concern that this economic downturn will eventually lead to a regional financial crisis that may potentially damage the rest of the world’s growth of the past couple of years.

People and businesses may continue their coffee talks over the prospect of another American recession. Be that as it may, they should avoid overreacting and behave irrationally to save our local, regional and global economies.

*source: from the Economist.

4 Lanes of Hope In China and Vietnam

2007-12-17T15:47:00.000-08:00

There was some good news from an article of the New York Times called: 4 Lanes of Hope in China and Vietnam”. A plan for a four-lane high-speed highway from Hanoi to Kunming will soon be implemented and expected to be in use by 1012. By then, it will take 9 hours to travel between the Vietnamese capital and Kunming instead of 3 days. The trade potential between the Northern part of Vietnam and Southern part of China has long been recognized but not much was done over the past 20 years due hostile history and “the fiercest fighting in the brief war of 1979, in which Hanoi and Beijing tested each other’s mettle in a contest for strategic influence in Southeast Asia”. China’s growth demands resources and agricultural commodities from its neighbors and Vietnam conveniently is a neighboring country that can still offer cheap raw materials and agricultural goods. With the expansion of the highway passing through some of the most undeveloped towns-Vinh Phuc, Phu Tho, Yen Bai and Lao Cai-, prospect for these poor town is within sight.

This news is refreshing because it proves that economics growth partly relies on regional interdependence in the sphere of globalization nowadays. History of conflicts and fights for land and resources between the two countries has long passed. It’s time to talk about mutual benefits from a win-win perspective rather than holding on to the ancient hatred and sense of insecurity. Such moment finally came. Economic planing and negotiation among countries and regions like this project is what I would like to do for my future career.

It only takes one good economic policy to improve lives of thousands. Gun power used to be the driving force for growth and expansion decades and centuries ago. Globalization now has proven that economic power brings the betterment to the people in a much more peaceful and collaborative manner. I would like to be a part of this process.

Identity

2007-12-11T07:29:00.001-08:00

What is your identity? If you can describe your own identity in one word, what would it be?

The one word for me: fear.

From The Plains of Georgia O'Keeffe

Perfectionist

2007-12-06T00:33:00.000-08:00

There is an interesting article from the NY Times today called “Mind: Unhappy? Self-Critical? Maybe You’re Just a Perfectionist”

“..Some researchers divide perfectionists into three types, based on answers to standardized questionnaires: Self-oriented strivers who struggle to live up to their high standards and appear to be at risk of self-critical depression; outwardly focused zealots who expect perfection from others, often ruining relationships; and those desperate to live up to an ideal they’re convinced others expect of them, a risk factor for suicidal thinking and eating disorders…”

Okay, I used to be type 1 and 3. I’m getting better now. I only have type 1 left to let go. An interesting observation from the Times is that these people with this transmitted disease actually proud being perfectionists and that our culture “highly values and reinforces their attitudes.” Propaganda to individual detriment I say!

The origin of my perfectionist attitude actually came from my own Confucius culture. Daddy raised me up in the way that supposedly there is no boundary for perfection. Growing up, my efforts and achievements were never enough in his eyes. It seemed as if the word limitation was never in his dictionary. That was the way he lived his life as well. Confucianism expects individual to strive for his or her very best while demanding for the ultimate social conformity. It is analogous to placing a wonderful, talented and creative bird in a large case- she can dance and sing but can never go beyond the case. Wow, this sounds so much similar to our lifestyle nowadays. Recalled 1984 of George Orwell. Dad was one of the most progressive men of his days. He forced me to go beyond my limit but at the same time gave me room to make my own decisions. Unfortunately, I still often feel like a frog sitting at the bottom of the well hoping to see the wide world. How much is enough?

2007-12-03T09:01:00.000-08:00

"To the degree that the mind is preoccupied with memories of the past and fantasies of the future, that is the degree to which we cannot reside in the present moment. There is nothing intrinsically wrong with this stream of consciousness mind that bounces back and forth time traveling. However, in truth, none of these past or future events exists. As long as our primary participation is with some other moment,your immediate experience will always be eclipsed"- Donna Farhi

The Deception of Relationship

2007-11-29T19:06:00.000-08:00

Gosh, the "single" thread on mtbr bothers me. This just opened my eyes of what a diverse world out there where people have incredible opinions that I sometimes didn't even come close to perceive. The female mountain bikers in this area got labeled by all kinds of title: offensive, cocky, demanding etc. I felt as if being labeled myself. It's so sad. It's detrimental. This current stage of lifestyle makes people desperate for love (just to be like that other friend who has a wonderful, sweet, athletic partner) rush into relationship and jump out of it as fast as they got into it. If one repeats that process 10 times, it will be incredibly hard not to start blaming the opposite sex for not fitting his or her “nice and easy going” standard. Not too long ago, someone had a hard time explaining to me what love really means to him and how does he know when he is in love with someone. How can one nurture a wonderful family while he or she has no idea what love really means? (No, not that diamond ring!) What is going wrong with all of us?

I have to admit, some of the women on the thread were quite inconsiderate and rude. However, labeling all the female mountain bikers as such is fundamentally flawed and ignorant.

Hum…what is it about relationship and love that people seem so desperately pursuing. I think the media plays a major role in shaping this desolate culture. Everywhere I go, look, listen and see are images of happy family, amazing couples and fulfilling partnerships. All these messages create the kind of artificial hunger for love that is destructive and immoral. Thanks to our advanced technology, our media has done a wonderful job in portraying things that do not come close to reflect reality. Nothing is perfect even you, I and the very comfortable lives that we’re living at the moment. How about thinking of that poor child in Eastern Europe who is greeting the Holly Season with cold, and hunger and do something about it?

*Sad.

Individualism and Equality

2007-11-28T18:16:00.000-08:00

Back to the issue of social stability:

French philosophers may seem culturally distant from us in many aspects; one actually saw through our society quite throroughly. Alexis De Tocqueville once made an observation about our society that individualism and equality can become a threat to the stability of the society because people disregard what the authority said but follow the majority's tendency. It is interesting that this observation made more than 150 years ago still holds its own value to our society today despite our marvelous technological and industrial progress. In fact, it's probably much more accurate and applicable today than 150 years ago. Didn't Weber once said that individuality and equality place people into the "iron cage"? After all, is it really freedom when our decisions mainly based on the majority's? This is dangerous, what if the majority are either wrong or deceptively lead by self-interest group of people. Where is the direction of our social trend?

I’m ordering “Bolwing Alone” of from the library for my holiday’s read.

Global Impact of Emerging Economies

2007-11-27T11:37:00.000-08:00

Just as I was thinking about the effect of “China’s factor” on the current performance of the world's economy, an article in the economist laid out factors that proved my suspicion. There is a concerted factor contributing by major emerging economies that is holding up current global economic engine while American economy is struggling. There are some incredible statistics about those economies justifying their roles.

The annual growth rate of these economies has surged to around 7% contributing to half of the globe's GDP growth, measured at market exchange rates. This is over three times as much as America’s. They hold large foreign-exchange reserves—no less than three-quarters of the global total. Most of them have small budget deficits. This means they can boost spending locally to offset weaker exports if need be. To support for such robust growth, these economies accounts for as much as four-fifths of the total increase in oil consumption in the past five years. This explains credibly the oil crisis that we’re going through momentarily.

It’s interesting how just a little more than a decade ago, developing countries poured money to wake up these economies from financial crisis (recall the Asian financial crisis in the late 90s) mainly through the World Bank and the IMF. Today, these very economies are backing the global economy while America fails to sustain its hegemonic role. This may once again prove that globalization, though with its own discontent, does have positive impact to the world’s economy. Now whether such holding brings betterment and improvement to individual consumer of each local economy is another issue for later discussion.

*Pictures credit to QT Luong

On Domestic Issues

2007-11-26T08:55:00.000-08:00

Wow,

It has been a while to read a rather neutral commentary from Paul Krugman. This article is an informative recap. It is hard to believe that it cost 11% more for a Thanksgiving dinner's meal this year in compare with last year while our economic growth hardly catches up with inflation rate. And yet, we have not seen the negative impact of increased gas price and plunging value of the dollar in the bills. This will be a rough winter for the poor.

http://www.nytimes.com/2007/11/26/opinion/26krugman.html?_r=1&hp&oref=slogi

The Dark Future Has Yet Realized

2007-11-26T06:46:00.000-08:00

Fred Bergsten on the world economy
Sep 9th 2004
From The Economist print edition

"...FIVE major risks threaten the world economy. Three centre on the United States: renewed sharp increases in the current-account deficit leading to a crash of the dollar; a budget profile that is out of control; and an outbreak of trade protectionism. A fourth relates to China, which faces a possible hard landing from its recent overheating. The fifth is that oil prices could rise to $60-70 per barrel even without a major political or terrorist disruption, and much higher with one.

Most of these risks reinforce each other. A further oil shock, a dollar collapse and a soaring American budget deficit would all generate much higher inflation and interest rates. A sharp dollar decline would increase the likelihood of further oil price rises. Larger budget deficits will produce larger American trade deficits, and thus more protectionism and dollar vulnerability. Realisation of any one of the five risks could substantially reduce world growth. If two or three, let alone all five, were to occur in combination then they would radically reverse the global outlook.…"

This article was written more than 3 years ago. Today, 4 out of 5 risks are being realized and the world economy has not yet collapsed: gas marked $100/ barrel, the dollar at is at negative exchange rate with Canadian dollars, current account and budget deficit have been increasing rapidly. I wonder if the "China factor" is actually a major playing factor that holds the world economy at the moment. Not only that Chinese economy did not land hard for overheating, its economy is growing at 10% rate this year and expect to stay in double digits the next two years. It has been years since economists forecasting a hard landing. Such even has not yet occurred and is not within our near-future's vision.

It's interesting how America and its economy no longer play the hegemony's role in shaping the world economy like it used to. Such dependency is good for one but dangerous for all.

The State of Human's Nature

2007-11-25T20:51:00.000-08:00

I'm struggling these days trying to decide if human's nature is good or bad. Am I agreeing with Locke or Rousseau? I would like to say that the natural state of human's nature is innocent, compassionate, genuine and free, but my multiple encounters with evil caused me to self-doubt. If human by nature is good, why are there so many wars, jealousy and destructions going on in various magnitudes? Rousseau said that civilization and society depart people from their natural state and therefore become destructive. I found this idea strikingly similar to Krishnamurthy's philosophy. I remember being very confused about Rousseau’s argument years ago. I couldn't visualize a society without regulations, orders and authority. I was afraid that our society would be dark and brutal as Locke described. Yoga has given me more trust on human kind just as it gave me more trust on myself. Various primal societies had lived in peace in the past such as Indian American tribes before the arrival of Western forces. I found it is more depressive now assuming that human nature is self-serving and quarrelsome: "The war of each against all" (Locke). This is just as difficult as to decide if there is God in this world. Well, that would be another discussion by itself.

This sounds like I partially have an answer. :)

The Law is Blind

2007-11-24T14:23:00.000-08:00

Before law school, I often thought the law is fixed with setting statutes and rules. I was so naive. Multiple discussions at Hastings opened my eyes about our adversarial system, which leaves out so much room for interpretations and empowers the courts as well as "well-trained" attorneys. Sometimes, I wonder if the continental system may work better. I doubt if it's the case. However, the major flaw of our system cannot seem to fix itself at any time soon. How can a fair system work when the people who have more money have a higher chance to win a case simply because the have the resource to hold on to the expansive, complicated and costly procedural process while the uneducated poor is left with limited or no option. Additionally, how can you trust that the judges will make the fair judgment that reflects the value of the public? This society is filled with preconceptions, prejudice and standards to the point where one's value can no longer be objective and inherent. The law is blind.

" Judges even when free, are still not wholly free. They are not knights- errant, roaming at will in pursuit of their own ideal of beauty or of goodness. They are to draw inspiration from consecrated principles. They re to exercise a discretion informed by tradition, methodized by analogy and disciplined by system." Benjamin Cardozo, The Nature of the Judicial Process"

Nice defense Cardozo!